For the second consecutive week, both major South Korean steel mills Hyundai Steel and POSCO have decided to skip announcing new bids for Japanese scrap. SteelOrbis has learned that domestic scrap flow to the mills is still strong despite the reductions in prices.
South Korean mills normally buy 70 percent of their scrap needs from their local market. A major South Korean producer reported that “they usually get around 20,000-22,000 tons of scrap on a daily basis from the domestic market, but for the past weeks they were getting 27,000-30,000 tons, so they may stay away from the overseas market until the end of this month.” SteelOrbis understands that finished steel demand in South Korea is still on the good side, hence mills are not sure if they can maintain this lower price policy for long. “We need to see what foreign scrap suppliers will decide, if they decrease their prices to competitive levels in the coming period, we may restart imports,” a mill commented. Hyundai Steel reduced its domestic scrap procurement prices by KRW 15,000/mt ($12/mt) this week for A weight to KRW 702,000-715,000/mt ($568-579/mt), while Dongkuk Steel’s reduction was KRW 10,000/mt ($8/mt) for the same grade to KRW 692,000-715,000/mt ($560-579/mt).
A SteelOrbis source reported that indications for ex-US bulk HMS I scrap offers to South Korea are standing at $615/mt CFR this week, which is $10/mt lower than the level recorded in Hyundai Steel’s most recent ex-US purchase reported on April 5. However, no deal at this level from the US has been disclosed to the market. South Korean producers’ attitude towards ex-US scrap is similar to Japanese scrap. They are monitoring the market until prices become competitive with prices in the local market.
Currently, Japanese producers are securing scrap ahead of the Golden Week holidays starting on April 29 and ending on May 8. Japanese sources believe that scrap prices in Japan may move down before or after the holiday, when restocking ends. Vietnam will be out of the market in the same period amid its holidays, and South Korean producers are unwilling to pay high price levels for Japanese scrap. As of today, April 21, Japanese mills’ procurement prices for H2 grade scrap are in the range of JPY 65,000-67,000/mt ($508-523/mt) DDP, for HS grade scrap, at JPY 69,000-72,000/mt ($539-562/mt) DDP and for shindachi scrap at JPY 71,000-75,000/mt ($554-586/mt) DDP. SteelOrbis has also learned that Tokyo Steel has bought a small cargo of H2 grade scrap at JPY 68,500-69,000/mt ($535-539/mt) CFR or JPY 67,000/mt ($523/mt) FOB. Tokyo Steel’s new price levels announced on April 18 for H2 scrap were in the range of JPY 64,500-66,500/mt ($504-519/mt) delivered.
As a result, the SteelOrbis reference price for ex-Japan H2 scrap has remained in the range of JPY 66,000-68,000/mt ($515-531/mt) FOB. Despite the sideways movement of prices on Japanese yen basis, dollar-based quotations have declined from the $525-541/mt levels recorded last week amid the ongoing depreciation of the yen against the US dollar.
$1 = KRW 1,235.9
$1 = JPY 128.05