South Korean mills have continued to purchase Japanese scrap, managing to get lower prices particularly for higher grade Japanese scrap such as shindachi as supply is gradually rising. Meanwhile, the healthy domestic scrap flow is giving South Korean producers leverage against higher ex-US scrap prices. Rebar demand in S. Korea is expected to remain slow during the winter, and so the high inventory levels of rebar in the country are not expected to disappear in the short term. Having said that, in 2020 South Korea imported a total of 4.378 million mt of scrap from various sources, and the total for 2021 is expected to exceed this tonnage despite South Korean mills’ strategy to depend on local scrap more in the past months.
Compared to the levels announced on December 10, Hyundai Steel has kept its bids for H2 grade stable at JPY 47,000/mt ($414/mt) FOB. “This level is offered by Hyundai to check the Japanese market, but few shippers could accept it over the past week due to the low levels,” commented one market player. As mentioned by SteelOrbis in previous reports, H2 grade scrap prices have little room, if any, to move down, and so the price in question may be the bottom for H2 grade scrap, at least for now.
The SteelOrbis reference price for export H2 scrap from Japan is at JPY 47,000-49,000/mt ($412-430/mt) FOB, stable since last Friday and slightly lower by JPY 500/mt ($4/mt) from the middle of last week.
On the other hand, market players report that another South Korean mill has bought some H2 grade scrap, in small volumes, at a much higher level this week. The price was at least JPY 3,000/mt ($26/mt) higher than the Hyundai bid, and, as the reason for this has not been confirmed by the time of publication, this higher level has been excluded from the reference price for ex-Japan H2.
Hyundai’s bids for HS scrap have moved down by another JPY 500/mt ($4.4/mt) to JPY 55,000/mt ($484/mt) FOB, while their bids for shindachi bara have been cut by JPY 2,000/mt ($17.6/mt) to JPY 56,000/mt ($493/mt) FOB. As supply increases for high grade scrap, the downward movement continues in terms of price. Earlier this week, before Hyundai’s bids, SeAH Besteel signed a contract for shindachi at JPY 62,500/mt CFR (or JPY 58,500/mt FOB), similar to last week.
SteelOrbis has observed that US-based suppliers are not interested in lower bids received from buyers in Asia ahead of the holidays. While some reports have stated that ex-US offers to South Korea are in the range of $515-520/mt CFR, some market players in South Korea stated that these levels are not workable anyway. SteelOrbis has also learned that bulk cargoes of HMS I/II 80:20 scrap from the US West Coast have been in the range of $520-525/mt CFR Vietnam, with market sources stating, “This level is too high and Vietnamese buyers are maintaining a wait-and-see stance.”
A similar situation is observed in the Russian A3 scrap segment. “There are no offers from Russia yet, but we can consider making some price inquiries in the coming week,” a source reported.