With Typhoon Hinnamnor hitting South Korean steel mills’ plants hard, players in the country are now focusing on recovery. While the impact of the typhoon is expected to disrupt the supply chain and support product prices, the effect on scrap is expected to be negative. A source from a major South Korean producer stated, “Scrap demand will be lower, though broken supply chains can be repaired quickly. There were a lot of scheduled maintenance works. If they can be shortened, we can see supply volumes returning to normal earlier than anticipated.” POSCO’s Pohang plant is now closed for the first time in 49 years, while Hyundai Steel’s production in the region has also been hit. Damage at Hyundai Steel’s Pohang plant is reportedly lower than the damage at POSCO. POSCO has announced that its typhoon damage restoration work is accelerating. The company plans to operate the three blast furnaces at the Pohang Works, which are currently blown down, sequentially from September 10.
Dongkuk Steel’s Pohang plant was also closed but is not flooded, SteelOrbis understands. A source commented, “Due to the typhoon, 500,000 mt of crude steel production is likely to be lost.”
Hyundai Steel has not shared any bid for Japanese scrap yet. SteelOrbis understands, it is unlikely that they will do so this week. As SteelOrbis reported in last week’s report, Hyundai Steel had already considered that Japanese scrap prices had reached a peak after recent price increases. On August 31, Hyundai Steel increased its bids for Japanese H2 grade to JPY 49,800/mt ($359/mt) FOB.
Yesterday, September 7, POSCO purchased ex-Japan busheling press scrap at JPY 58,000/mt ($404/mt) FOB, which was down JPY 1,000/mt ($21/mt) as compared to the previous bids on August 31.
Taking the CFR Vietnam offers from the US into consideration, a South Korean source reported that the indications for ex-US West Coast bulk HMS I scrap are at $425/mt CFR. No deal at this level has been heard over the past week in South Korea.
As of today, September 8, domestic A weight scrap prices at Hyundai Steel and Dongkuk Steel’s Incheon, Dangjin and Pohang plants are at KRW 517,000-525,000 ($374-380/mt), up by KRW 10,000-20,000/mt ($3-5/mt) week on week. The price revisions were done on Friday, September 2, before the typhoon hit South Korea. After the disaster, Pohang plants stopped accepting scrap.
*Exchange rate fluctuations are taken into consideration when calculating the dollar-based price changes
$1 = KRW 1,380.33
$1 = JPY 143.44