 |
| Mitsui and Ibokin |
Ferrous scrap supply in Japan is becoming the primary focus for major trading houses and steelmakers driving decarbonization. Mitsui & Co recently signed a memorandum of understanding with recycler Ibokin Co to enhance this critical resource pool. This strategic partnership aims to optimize the entire resource recovery chain from demolition to final recycling. Consequently, Japanese steel mills seek to secure high-quality raw materials as they transition toward electric-arc furnace operations. Therefore, infrastructure investments are accelerating to stabilize domestic supply chains and guarantee traceability for green steel production.
Government Investment and Regulatory Export Barriers
Meanwhile, the Japanese government actively supports this industrial shift with massive financial mobilization and strategic regulatory planning. Tokyo pledged to mobilize ¥1 trillion in public and private investment by 2030 to expand recycling capacity. This ambitious initiative aims to upgrade domestic ferrous scrap supply in Japan into high-grade steels for electric vehicles. Furthermore, the Ministry for the Environment is promoting policies to strengthen domestic circular economy systems. As a result, industry sources expect new legal frameworks designed to restrict the outflow of valuable scrap overseas.
Nippon Steel EAF Conversion Triggers Massive Raw Material Demand
Nippon Steel has moved forward with massive capital expenditure to convert its flagship blast furnaces into electric-arc furnaces. The company will invest ¥630.2 billion to install a large-scale 2 million tonnes per year EAF at Kyushu Works. Additionally, secondary projects at Setouchi Works and Yamaguchi Works will rapidly expand the steelmaker's total recycling footprint. These three major facilities will require roughly 2 million tonnes of scrap annually at full utilization. However, surging domestic scrap prices and structurally declining industrial output present significant cost headwinds for these decarbonization plans.
ScrapInsight Commentary
The aggressive push toward electric-arc furnace steelmaking will structurally tighten the ferrous scrap supply in Japan over the next decade. While potential export restrictions might safeguard domestic supply, they will significantly disrupt steelmaking raw material flows across Vietnam and Bangladesh. Consequently, regional scrap premiums will likely remain elevated, forcing mills to prioritize long-term procurement partnerships over spot-market buying.
