Japanese blast furnace(BF)-based steel mills have been using more scrap in their basic oxygen furnaces in recent weeks due to a rise in steel production and high costs for iron ore, market participants told Fastmarkets.
BFs in the country
cut steel production drastically in the first half of 2020, with the Covid-19 pandemic battering demand in the automotive and manufacturing sector.
The index for Japanese manufacturing output has started to bounce back from its second-quarter lows, hitting 89.8 points in July, up from 82.9 points in June but down from January's 93.5 points, according to the country's Ministry of Economy, Trade and Industry (METI).
A recent revival in the domestic automotive sector has allowed these mills to raise production levels again, a BF steelmaker source told Fastmarkets.
"We are recovering in the automotive sector, but manufacturing products have low demand- particularly for white goods going abroad," the source said.
"BFs are trying to buy more scrap now and are trying to get it at a low price. They are trying to leverage their raw material costs - iron ore costs...