Over the past week, South Korean mills have been increasing their domestic scrap procurement prices because of higher import scrap quotations, in order to maintain scrap flow to mills. Price expectations were high and scrap flow was not improving. However, a South Korean source commented that, despite the warmer weather in March, construction activities have not reached normal levels. “There is a new law called the Severe Accidents Penalties Act, which is very harsh on companies, so construction was hit hard by it,” the source commented. As a result, finished steel product prices have not been rising as rapidly as scrap prices in past weeks and demand has not been strong. This situation has led South Korean mills to halt price rises in the import scrap segment.
On the other hand, South Korean mills are still making inquiries for Russian A3 scrap since suppliers have bank accounts in third countries such as Singapore and Hong Kong. “Last week, Russian suppliers’ offers to South Korea for A3 grade were at $630-640/mt CFR but shipments were being canceled and we did not give bids,” a producer stated, adding, “The vessel situation has been improving since then. I think we will give some bids for Russian A3 this week.” SteelOrbis understands that vessels are afraid to go to Russian ports due to their concerns regarding payments and further sanctions, “but payments can easily be done by banks in third party countries,” a source said. For their previous commitments, SteelOrbis understands that Russia tries to continue shipments. Nevertheless, sources in South Korea mention that payments through banks in Singapore and Hong Kong may be difficult as well and some of banks there have already refused to work in relation to sales for Russian materials (for other products than scrap).
As compared to the levels announced on March 10, Hyundai Steel kept its bid for H2 grade by a stable at JPY 63,500/mt ($535/mt) FOB. On March 14, the main EAF-based steel producer in Japan, Tokyo Steel, announced its new price levels for H2 scrap in the range of JPY 60,500-62,500/mt ($510-527/mt) delivered. Hyundai’s price is still above the local market prices, and it is heard that the South Korean producer had received sufficient offers from Japan last week at the mentioned price level.
As a result, the SteelOrbis reference price for ex-Japan H2 scrap is still at JPY 63,500-64,500/mt ($535-543/mt) FOB, remaining stable week on week.
As compared to March 10, Hyundai’s bids for HS scrap have moved sideways at JPY 68,500/mt ($577/mt) FOB. The producer’s bids for shredded and shindachi bara grades have also remained unchanged week on week and are still at JPY 68,500/mt ($577/mt), both on FOB basis.
Indications for ex-US West Coast HMS I scrap to South Korea are closer to $700/mt CFR, taking into account the latest offers and deals to Vietnam and Bangladesh, which are considered significantly higher than Japanese scrap offers. “No way we would pay that high for ex-US scrap. It is more convenient to buy from Japan for now, and, if Russia can continue supplying A3 scrap lower than the US, it will be attractive,” a source stated.
Meanwhile, with the total of KRW 30,000/mt ($25/mt) price increases announced in the local South Korean scrap market since March 10, Hyundai’s local scrap prices for A weight is now in the range of KRW 707,000-730,000/mt ($585-604/mt), while Dongkuk Steel’s prices are in the range of KRW 700,000-712,000/mt ($579-588/mt).
$1 = JPY 118.70
$1 = KRW 1,209.7