Local steel rebar producers in South Korea are hinting at their strong intention to freeze their ex-factory prices at current levels, Korea Metal Journal has reported.
"We are reducing our rebar production due to weak demand. The supply of our rebars will decrease to a large extent in the second half of this year due to our planned large-scale facility repair works," said an official at one South Korean rebar producer, "The prices for rebars in the domestic market are unlikely to drop further, as the prices for raw materials have entered a stabilization stage and, in particular, rebar prices are going up in the international market," the official added.
Domestic market prices for steel scrap, a major raw material for rebar, declined twice in May, dropping by KRW 20,000/mt ($19/mt), and then becoming stabilized. Taking a look at the overseas market price trends for steel scrap, US suppliers' export prices for East Asia are more or less stable with just a slight weak tendency at the level of $495/mt FOB. Turkish traders are importing US steel scrap at prices which have increased by $15-20/mt from a month ago. Local market prices for steel scrap in Japan were at JPY 37,000/mt ($458/mt) in March, JPY 42,000/mt ($520/mt) in April and JPY 37,000/mt in the first week of May and at JPY 36,500/mt ($452/mt) in the third week of May. Rebar production by Japan is also likely to decrease due to the reduced demand for rebar in Japan.
In South Korea, supply of rebars is anticipated to drop significantly in June due to domestic rebar producers' planned large-scale facility repair works in summer. In particular, the decline in monthly rebar production in July and August is expected to be in the range of 200,000-250,000 mt. Traders' reduction of their rebar inventories in expectation of a drop in rebar prices is also expected to exert an influence on the rebar price trend. According to rebar market participants, major traders' inventory of rebar as of May 20 had halved compared to the preceding month.