The downtrend of the local South Korean scrap market has continued over the past week. While scrap flow to mills’ yards has slowed down a little due to the summer holidays, South Korean mills still have enough inventories on hand to exert pressure on both import and domestic scrap quotations. “Another decrease in domestic scrap prices is planned for next week,” a source commented. Under the current healthy inventory conditions, South Korean mills are in no rush to conclude import scrap bookings.
Japanese scrap prices to the export markets have declined to competitive levels, though the situation in South Korea remains as outlined above. Hyundai Steel and POSCO have not announced bids for Japanese scrap this week. SteelOrbis reported yesterday that Tokyo Bay FAS-based prices for H2 grade translate to JPY 39,500/mt ($296/mt, exchange rate at 133.68) FOB, down by JPY 1,000/mt over the past week . On July 21, Hyundai Steel announced its bid for Japanese H2 grade at JPY 40,500/mt ($293/mt) FOB with the Japanese yen at 138.24 to the dollar. Hence, it would be safe to say South Korean mills will seek lower levels than the current Tokyo Bay FAS prices on dollar basis in the coming round of bookings.
As regards US West Coast for bulk HMS I scrap, a source at one of the major South Korean mills stated, “They are definitely not in the market and other mills in South Korea are also unlikely to be in the market.” SteelOrbis understands that South Korean producers’ HMS equivalent scrap price for delivery to mill is around $330/mt, and so it is quite difficult for South Korean mills to approach US material. According to the source in question, “US West Coast suppliers are constantly looking for alternative buyers like South America. They did manage to sell to India and Bangladesh, but it seems mills in Southeast and East Asian countries are not that keen.”
As of today, August 4, Hyundai Steel’s domestic A weight scrap prices at its Incheon, Dangjin and Pohang plants are at KRW 447,000-475,000/mt ($341-362/mt), similar to Dongkuk Steel’s prices for the same grade. The reduction in the domestic scrap prices of these two producers totals KRW 10,000/mt ($10/mt) since July 28.
$1 = KRW 1,309.97