South Korean mills are still succeeding in exerting pressure on Japanese scrap prices ahead of their planned maintenance works, with the support of their healthy scrap inventories as well as the higher allocations observed for higher grade scrap in Japan. Meanwhile, the US segment is still silent and estimations for US origin scrap are decreasing as well.
As compared to the levels announced on November 17, Hyundai Steel has reduced its bids for H2 grade by JPY 2,000/mt ($17.7/mt) to JPY 47,500/mt ($421/mt) FOB. Earlier this week, Japanese offers to South Korea for H2 grade scrap were at JPY 50,000/mt ($443/mt) FOB, though the workable levels were estimated to be in the range of JPY 48,500-49,000/mt ($430-434/mt) FOB, down from JPY 49,500/mt ($437/mt) FOB fixed in a deal to S. Korea last week.
While Hyundai’s bids for HS scrap have moved down by JPY 1,000/mt ($8.8/mt) to JPY 56,000/mt ($496/mt) FOB, their bids for shindachi bara and shindachi press have been reduced by JPY 3,500/mt ($31/mt) to JPY 60,000/mt ($532/mt) FOB and JPY 60,500/mt ($536/mt) FOB, respectively. The supply of shindachi is still on the higher side, and so the prices are under pressure. Last week, a deal to another South Korean mill was at JPY 61,000/mt ($539/mt) FOB for this grade.
Meanwhile, bids for shredded scrap from Hyundai are now JPY 3,000/mt ($27/mt) lower as compared to November 17 or stable as compared to the previous ex-Japan deal last week at JPY 53,000/mt FOB ($470/mt). “As Hyundai believes that prices are declining, they would most probably buy small tonnages from Japan at the mentioned price levels,” a source commented. Hyundai has followed the same strategy over the past two weeks, buying only around half what was offered from Japan.
Additionally, SeaAH Besteel has also reduced its bids for Japanese shindachi scrap by JPY 1,000/mt ($8.8/mt) to JPY 64,000/mt ($567/mt) CFR, while, with the JPY 4,000/mt ($35/mt) freight, the price of SeaAH Besteel is at the same level as Hyundai’s prices.
In the US scrap segment, workable levels for HMS I scrap are estimated to be around $520-530/mt CFR. This level is $12-22/mt lower than Hyundai’s previous ex-US booking closed at $542/mt CFR in the middle of November. “There are no clear indications for ex-US scrap yet,” a source stated, “South Korean mills have maintenance works until the end of the year, and so they do not have strong demand for scrap and they also have plenty of scrap in inventories.”
The same reasons are causing domestic scrap prices in South Korea to move down further. Hyundai Steel announced a KRW 10,000/mt ($8.5/mt) planned price cut for December 7 at its Pohang, Incheon and Dangjin plants. The domestic A weight scrap prices of the producer are now listed at KRW 590,000-605,000/mt ($502-514/mt). A similar move has also come from Dongkuk Steel, which announced a KRW 10,000/mt ($8.5/mt) decrease for its domestic scrap procurement quotations and listed them at KRW 595,000/mt ($506/mt) for its Incheon plant.
$1 = JPY 112.77
$1 = KRW 1,176