As South Korean steel industry tried to repair the damages resulting from the Typhoon Hinnamnor over the past week, the market was relatively silent in terms of import scrap. SteelOrbis reported earlier this week that South Korean steelmaker Pohang Iron and Steel Co. (POSCO) started producing semi-finished steel with the restart of its blast furnaces at Pohang steelworks. The company resumed the operation of blast furnace No. 3 on September 10, and resumed operations at blast furnaces No. 2 and No. 4 on September 12.
Hyundai Steel has not shared any bids for Japanese scrap, but from other mills there was some demand. SteelOrbis has learned that some buyers in South Korea bought shindachi scrap at JPY 58,000/mt ($405/mt) CFR and shredded at JPY 57,000/mt ($398/mt) CFR last week. Two weeks ago, POSCO’s shredded and shindachi press scrap bids were at JPY 57,500/mt ($415/mt) CFR and JPY 59,000/mt ($425/mt) CFR, respectively, with the Japanese yen-US dollar exchange rate standing at 138.69.
SteelOrbis understands that domestic scrap prices in Japan are supported by the demand received from Japanese mills. According to a source, “[Japanese mills] have been forming stocks to operate in the holiday next week. But Japanese market will go down sooner or later.”
As of today, Japanese FAS based scrap prices are at JPY 51,000/mt ($356/mt) for H2 grades, JPY 54,500/mt ($381/mt) for HS grades and at JPY 53,500/mt ($374/mt) for shindachi grades. These prices correspond to JPY 52,000/mt ($363/mt), JPY 55,500/mt ($388/mt) and JPY 54,500/mt ($381/mt) on a FOB basis with the same respective order. This level is slightly higher than the most recent bid from South Korean producer Hyundai at JPY 49,800/mt ($359/mt with JPY at 138.69 to a dollar) FOB on August 31, for Japanese H2 grade.
As a result, the reference price for ex-Japan H2 scrap has remained stable over the week at JPY 49,000-52,000/mt ($343-363/mt) FOB. Due to the depreciation of the Japanese yen against the US dollar, dollar based prices have declined by $2/mt week on week. The lower end of the range has left unchanged as offer prices to Vietnam have declined this week, while FAS based prices are still supporting the upper end as in FOB to South Korea.
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 $390-395/mt CFR. No deal at this level has been heard over the past week in South Korea. The sharp decline observed on the US West Coast prices are caused by the higher allocations, SteelOrbis hears.
Over the past week, domestic A weight scrap prices at Hyundai Steel’s Incheon and Dangjin plants have increased by KRW 20,000/mt, while prices for Pohang plant have remained stable. As a result, Hyundai Steel’s domestic scrap quotations are in the range of KRW 525,000-537,000 ($378-386/mt), up by $4-6/mt week on week. Meanwhile, Dongkuk Steel’s domestic A weight scrap procurement prices have moved up by KRW 20,000/mt ($12/mt) for all plants and are at KRW 537,000-545,000/mt ($386-392/mt).
*Exchange rate fluctuations are taken into consideration when calculating the dollar-based price changes.
$1 = KRW 1,390.21
$1 = JPY 143.13