Over the past week, South Korean mills have been increasing their domestic scrap procurement prices, while they were relatively quiet on the import scrap side, waiting for the result of South Korea’s presidential election. The government has changed with the conservative candidate Yoon Suk-yeol winning the election. South Korean sources state that their new president will be “friendlier to corporations” and “they are not expecting a dramatic change in the monetary policies of South Korea.” With the rises recorded in the Japanese Kanto tender yesterday, March 9, and local Japanese scrap prices moving up accordingly, South Korean mills have been forced to raise their bids for Japanese H2 scrap to be able to buy more scrap. A source commented, “We will need to increase our bids or we can just reduce production.”
As compared to the levels announced on March 3, Hyundai Steel increased its bid for H2 grade by a significant JPY 7,000/mt ($60/mt) to JPY 63,500/mt ($548/mt) FOB. This hike was announced just after Hyundai’s attempt to reduce its bids for Japanese scrap last week. On March 9, the main EAF-based steel producer in Japan, Tokyo Steel, announced its new price levels for H2 scrap in the range of JPY 58,000-60,000/mt ($500-518/mt) delivered. Although Hyundai’s bids are above this range, a Japanese market player said, “Hyundai may get enough responses for its bid, but they will be limited.”
As a result, the SteelOrbis reference price for ex-Japan H2 scrap is now at JPY 63,500-64,500/mt ($548-556/mt) FOB, increasing by JPY 7,000/mt ($60/mt) on the lower end as SteelOrbis anticipated in its report published on March 9, saying that South Korean mills will be forced to raise their bids for Japanese H2 in the coming days.
As compared to March 3, Hyundai’s bids for HS scrap have moved up by JPY 6,500/mt ($56/mt) to JPY 68,500/mt ($591/mt) FOB. The producer’s bids for shredded and shindachi bara grades have also increased by JPY 6,500/mt ($56/mt) week on week to JPY 68,500/mt ($591/mt), both on FOB basis.
Meanwhile, with the latest KRW 10,000/mt ($8/mt) price increases announced in the local South Korean scrap market today, March 10, Hyundai’s local scrap prices for A weight are now in the range of KRW 687,000-690,000/mt ($560-562/mt), while Dongkuk Steel’s prices are in the range of KRW 692,000-700,000/mt ($564-570/mt). Despite the increases announced on KRW basis, the depreciation of the South Korean currency against the US dollar has caused dollar-based prices to decrease slightly over the past week.
$1 = JPY 115.93
$1 = KRW 1,227.72