Over the past weeks, it has been observed that South Korean steelmakers were mainly working with domestic scrap, with major South Korean mills staying away from concluding import scrap purchases. However, domestic scrap flow in South Korea has significantly slowed down. “While prices were declining, local scrap suppliers were willing to sell what they collected. Accordingly, they refrained from increasing their inventory levels and instead they sold out what they had. Now that Japanese scrap prices have hit the bottom, and with scrap offers from the US being at very high levels, we can see that prices will move up. Hence, domestic scrap suppliers are also trying to restock,” a source at a major South Korean producer commented. SteelOrbis understands that South Korean mills will focus on Japanese scrap for now, considering ex-US scrap offers unacceptable. If they cannot find enough volumes from their domestic market or from Japan, they may consider increasing their prices for these segments to secure scrap.
As compared to the levels announced on July 21, Hyundai Steel has increased its bids for Japanese H2 grade by JPY 2,000/mt to JPY 42,500/mt ($314/mt) FOB, with dollar-based quotations moving up by $21/mt. Last week, Dongkuk Steel has bought a small tonnage from Japan in the range of JPY 39,000-40,000/mt ($295-303/mt) FOB. Also, last week the Kanto Tetsugen monthly export tender was closed at the average price of JPY 42,061/mt ($312/mt) FAS, corresponding to JPY 43,061/mt ($319/mt) on FOB basis. Hyundai Steel seems to be picking up the pace and closing the gap between its prices and those of other buyers of Japanese scrap.
As compared to July 21, Hyundai Steel’s bids for HS scrap have risen by JPY 3,000/mt or $29/mt to JPY 48,000/mt ($355/mt) FOB. Its bids for shindachi bara scrap are also at JPY 48,000/mt ($355/mt) FOB, JPY 3,000/mt or $29/mt higher than the previous bids.
Finally, the steel mill has bid JPY 47,000/mt ($348/mt) FOB for shredded grades and JPY 43,000/mt ($318/mt) FOB for H1/2 grades.
SteelOrbis has learned that US West Coast for bulk HMS I scrap offers given to South Korea this week were at $385-395/mt CFR, indicating a $15-20/mt increase in prices as compared to those shared on August 18. A South Korean mill also reported that offers from the US to South Korea are in the range of $400-410/mt CFR. “This level is too high to even consider. Not only as compared to the Japanese offers, but this is almost $100/mt higher than the numbers we pay for local scrap,” the source commented. As a result, South Korean mills are not expected to turn to US origin scrap unless a balance between supplier regions - including the domestic market - is met in the coming days, or “unless a recovery in the product market is seen.”
As of today, August 18, Hyundai Steel’s domestic A weight scrap prices at its Incheon, Dangjin and Pohang plants are at KRW 437,000-455,000/mt ($331-344/mt), stable week on week. Another South Korean mill Dongkuk Steel’s prices for the same grade have decreased by KRW 10,000/mt ($13/mt) over the past week to KRW 437,000-455,000/mt ($331-344/mt). According to a market player, South Korean mills have room to increase their domestic scrap quotations as high as KRW 50,000/mt ($38/mt) to maintain scrap flow.
$1 = KRW 1,322.06
$1 = JPY 135.22