While the local South Korean scrap market has continued to move down over the past week, the heavy rainfall causing floods all over the country was the main topic in the market. Already with an economy that carries downside risks due to high inflation and regional political and economic tensions, this latest natural disaster has not helped. “Demand for steel has not recovered fully in South Korea, while the flood also reduced the pace of purchases of steel or raw materials,” a source commented. Import scrap is a good alternative to the disrupted supply chain in South Korea, and it is heard that a South Korean mill has concluded a purchase from Japan.
While Hyundai Steel and POSCO have not announced bids for Japanese scrap this week, Dongkuk Steel has bought a small tonnage from Japan in the range of JPY 39,000-40,000/mt ($295-303/mt) FOB. Just yesterday, the Kanto Tetsugen monthly export tender was closed at the average price of JPY 43,061/mt ($319/mt) on FOB basis. There was already the view in South Korea that bottom price levels would be reached. With the Japanese H2 prices recovering a bit, South Korean buyers will evaluate the situation. According to a source from a major South Korean mill, “The bottom is possible, though the domestic scrap market in South Korea is still dropping and demand is not strong enough to support a price hike.”
As a result, the reference price for ex-Japan H2 scrap has increased by JPY 800/mt or $9/mt on the upper end due to the higher levels recorded in the Kanto tender to JPY 39,500-43,000/mt ($299-325/mt) FOB.
There was a rumour of US West Coast bulk HMS I scrap given to South Korea this week at $370-375/mt CFR, though market players believe that this level is too low to be this week’s price.
As of today, August 11, Hyundai Steel’s domestic A weight scrap prices at its Incheon, Dangjin and Pohang plants are at KRW 437,000-455,000/mt ($336-347/mt), with the domestic scrap prices of the producer falling by KRW 10,000-20,000/mt ($5-15/mt) since August 4. Local mill Dongkuk Steel’s prices for the same grade are currently at KRW 447,000-465,000/mt ($344-357/mt), indicating a decrease of KRW 10,000/mt ($3-5/mt) on the upper end over the past week.
$1 = KRW 1,301.22
$1 = JPY 132.22