South Korean mills are reducing their H2 scrap procurement prices both in the local and import markets this week, while they are keeping bids for higher grades like HS unchanged. Customers have not been ready for price improvements, which may be possible in the near future due to some increases in buying in Vietnam and the rebound seen in other Asian countries like Bangladesh and Taiwan.
SteelOrbis has learned that Daehan and Dongkuk Steel have announced their bids for Japanese H2 grade scrap at JPY 45,500/mt ($414/mt) FOB and JPY 45,000/mt ($409/mt) FOB, both down by JPY 500/mt ($4.6/mt) compared to the previous week, respectively. One or two lots with limited volumes have been traded to these mills at the abovementioned levels. The CFR prices in these contracts were at around JPY 49,000-49,500/mt ($445-450/mt).
Additionally, POSCO’s bids for HS grade scrap from Japan have been assessed by market sources at JPY 62,000/mt CFR ($564/mt), stable week on week. In comparison, Japanese blast furnace-based mills’ purchase quotations are currently at JPY 60,000/mt ($546/mt) delivered, which is in line with the FOB price level.
Japanese sellers from the Kanto area are targeting JPY 46,000-47,000/mt ($418-428/mt) FOB for their H2 grade scrap sales. The Kanto Tetsugen scrap export tender on September 9 was closed for four lots totalling 20,000 mt of H2 scrap at JPY 46,260/mt ($421/mt) FAS for Vietnam. This price level translates to $470-480/mt CFR Vietnam with freight being increased recently, versus the tradable level at around $460-465/mt CFR Vietnam in the previous week. Market sources state that the higher difference between procurement prices in Vietnam and S. Korea is the result of scrap quality and the greater willingness of Vietnamese importers to purchase after the surge in their billet sales to China. Also, South Korean buyers have the opportunity to buy from Japan’s Kyushu region, which is closer to South Korea and has a freight advantage, SteelOrbis understands.
As a result, the ex-Japan H2 reference price has been settled by SteelOrbis at JPY 45,000-47,000/mt ($409-427/mt) FOB, with the higher end of the range up by JPY 1,000/mt ($9/mt) over the past week.
The tradable price for ex-US HMS I scrap in S. Korea has been assessed at $490/mt CFR, but no deals have been reported as it is too high for customers and suppliers may try to achieve higher levels at other destinations like Bangladesh and Vietnam.
As of today, September 10, Hyundai Steel’s local scrap procurement prices at its Incheon and Dangjin plants are both at KRW 560,000/mt ($480/mt), and at KRW 575,000/mt ($493/mt) at its Pohang plant. However, the producer is planning another KRW 10,000/mt ($8.57/mt) cut in its prices on September 17. The latest reduction was again KRW 10,000/mt and came into effect today. No new bids are coming for Japanese scrap from Hyundai due to its lower scrap consumption linked to maintenance works.
Dongkuk Steel’s local scrap purchase prices are currently at KRW 560,000/mt ($480/mt) in Incheon and KRW 570,000/mt ($488/mt) at the Pohang plant.
$1 = JPY 109.8
$1 = KRW 1,166.2