South Korean mills are showing little interest in scrap imports, as their local scrap market is declining gradually and is expected to continue to do so. “It seems our domestic scrap market will continue to fall at a faster pace, and, if it were not for the effort to support product prices, the fall could have been faster. So, if product prices are no longer supportable, we will be lowering the domestic scrap price much faster and may have little need for import scrap,” a source at a major South Korean mill commented.
Following South Korean steelmaker Daehan’s purchase of ex-Japan H1/2 50:50 scrap with a price translating as JPY 57,000/mt ($428/mt) CFR for H2 benchmark grade last week, there has been no confirmed deal from Japan to South Korea. Due to the above reasons, South Korean mills Hyundai and POSCO have not held tenders.
However, SteelOrbis has learned that Tokyo Bay FOB based price for H2 grade is at JPY 52,000/mt, which translates to $435/mt CFR South Korea with $50/mt freight. “Japanese scrap price for HMS is very high as compared to its competitors, so nothing has been done this week,” a Japanese source reported.
Ex-US bulk HMS I scrap offers to South Korea from the West Coast are at around $390-400/mt CFR, while some sources report offers even at $380/mt CFR on Friday, far below the assessment of $450/mt CFR last week. There was still no interest from buyers, with one commenting, “Even if the price goes lower, we may not be interested.”
The downward pressure on ex-Japan scrap prices in South Korea is expected to continue in the coming week. Firstly, the gap between ex-US and ex-Japan scrap is too high. Secondly, demand for import scrap in South Korea, Taiwan and Vietnam is on the low side. “It depends on the Tokyo Steel procurement prices, but it is generally safe to say Japanese export quotations have a tendency to move down,” a SteelOrbis Japanese source commented.
As a result, the SteelOrbis reference price for ex-Japan H2 scrap has settled at JPY 52,000/mt ($385/mt) FOB, down by JPY 1,000/mt on average or $13/mt, taking into account exchange rate fluctuations, over the past week.
As of today, June 24, Hyundai Steel’s domestic A weight scrap prices in its Incheon, Dangjin and Pohang plants are at KRW 612,000-615,000/mt ($473-475/mt), similar to Dongkuk Steel’s prices for the same grade.
$1 = JPY 135.00
$1 = KRW 1,294.23