Major South Korean steel producer Hyundai Steel has returned to the import scrap market with lower price levels for Japanese scrap. While fellow South Korean steelmaker POSCO continues its efforts to repair its mills that were damaged by the recent typhoon, there is the possibility of a strike by unionized workers at Hyundai Steel. A source at a major South Korean mill commented, “This may have an impact on scrap demand since it has already been hit by POSCO’s situation.” According to a local news agency, “Earlier this week, Hyundai Steel's four unions, which are all affiliated with the Korean Metal Workers' Union, warned that they would strike unless management agrees to hold wage negotiations on Thursday.” A SteelOrbis contact said “With the current government, the labour union has difficult choices. So, I think it may not be a serious strike but we cannot rule out the possibility. Because it is not only about money now but pride.”
As compared to the levels announced on August 31, Hyundai Steel has decreased its bids for Japanese H2 grade by JPY 1,300/mt or $19/mt to JPY 48,500/mt ($340/mt) FOB. SteelOrbis has learned that Hyundai Steel has booked around 40,000 mt of H2 scrap. A South Korean source commented, “This tonnage is not too bad since it is below $370s/mt CFR.”
In the same period, Hyundai Steel’s bids for HS scrap have moved down by JPY 1,500/mt or $22/mt to JPY 54,000/mt ($378/mt) FOB.
Hyundai Steel’s bids are currently at JPY 49,000/mt ($347/mt) for H1/H2 scrap and at JPY 49,500/mt ($350/mt) for H1 scrap.
As a result, the SteelOrbis reference price for ex-Japan H2 scrap has moved down by JPY 500-2,500/mt over the past week to JPY 48,500-49,500/mt ($340-350/mt) FOB. Due to the slight appreciation of the Japanese yen against the US dollar, dollar-based prices have declined by $3-13/mt week on week. The lower end of the range is now represented by Hyundai Steel’s purchase prices, while the upper end has been revised in line with the Japanese scrap offers given to Vietnam.
There have been no solid offers from the US to South Korea this week. Taking the CFR Vietnam offers from the US into consideration, indications for ex-US West Coast bulk HMS I scrap are at $385/mt CFR. No deal at this level has been heard over the past week in South Korea, and South Korean sources state they are not sure if the price is still available, with the price in Turkey rebounding. A South Korean contact stated, “Given Hyundai Steel’s purchase price for Japanese scrap, I would say below $380/mt CFR could be something South Koreans may consider for ex-US HMS I scrap.”
$1 = JPY 141.77