South Korean producer POSCO has announced bids for Japanese scrap after a month of absence from the market. Market sources report that POSCO remains the only South Korean producer showing an interest in Japanese scrap. Local scrap market prices in South Korea have been declining for three weeks now and other domestic steelmakers’ scrap inventory levels are on the high side. In fact, Hyundai Steel has just stopped buying scrap from its domestic market. The local scrap market in South Korea may have hit bottom price levels this week, sources report. This move from POSCO is interpreted as an effort to increase its scrap inventory levels.
POSCO has shared bids for Japanese HS grade scrap at JPY 47,500/mt ($331/mt) CFR, down JPY 1,500/mt month on month. Due to the appreciation of the Japanese yen against the US dollar, its dollar-based price has increased by $19/mt over this period. The producer’s offers for shindachi grade scrap are now at JPY 46,500/mt CFR or $324/mt CFR, moving down by JPY 2,500/mt, but up $12/mt on US dollar basis.
POSCO also shared bids for Japanese shredded scrap at JPY 46,500/mt ($324/mt) CFR. The JPY 46,500/mt level indicates FOB-based prices for Japanese shredded scrap are at around JPY 43,500/mt or $303/mt with freight between South Korea and Japan being at around JPY 3,000/mt.
Considering the gap between ex-Japan shredded and H2 scrap prices at around JPY 3,000-4,000/mt, this means indications for ex-Japan H2 prices for South Korea are at JPY 39,500-40,500/mt FOB or $275-282/mt FOB.
$1 = JPY 143.43