South Korean mills are trying to secure import scrap tonnages as scrap flow in their domestic market remains on the slow side. As SteelOrbis mentioned in its previous reports, the long-standing downward trend in the local South Korean scrap market has impacted suppliers, who are now asking for higher levels. As a result, South Korean producers are increasing their bids for Japanese scrap, while they are also focusing on alternative suppliers such as Russia. SteelOrbis also observes that suppliers all over the world are monitoring the Southeast Asian market, trying to figure out if the increase in prices there can give rise to opportunities in the coming days since Turkey’s demand for scrap is still sluggish.
As compared to the levels announced on August 24, Hyundai Steel has increased its bids for Japanese H2 grade by JPY 3,800/mt to JPY 49,800/mt ($359/mt) FOB, with its dollar-based quotations moving up by another $24/mt. Last week, Hyundai Steel had increased its bids for Japanese H2 grade to JPY 46,000/mt ($335/mt with the exchange rate at 137.35) FOB.
As compared to August 24, Hyundai’s bids for HS scrap have risen by JPY 7,500/mt or $50/mt to JPY 55,500/mt ($400/mt) FOB. Hyundai Steel did not share any bids for shindachi bara or shredded scrap this week. SteelOrbis has learned that Hyundai Steel bought a total of 35,000 mt of scrap, mixed grades, at the mentioned price levels. It is heard that the steel producer is considering taking a step back from the market as it has met its needs for the short term.
Another South Korean importer POSCO has returned to the market today, August 31, after a three month-long absence. POSCO’s bids for HS grade scrap is at JPY 59,500/mt ($429/mt) CFR. The freight between Japan and South Korea is around JPY 4,000-4,500/mt, and so POSCO’s HS scrap prices are very similar to Hyundai Steel’s bids on FOB basis.
POSCO’S shredded and shindachi press scrap bids are at JPY 57,500/mt ($415/mt) CFR and JPY 59,000/mt ($425/mt) CFR, respectively.
Additionally, two South Korean mills have concluded deals for Russian A3 scrap, with a total of 40,000 mt bought at $425/mt CFR. Preferring to buy Russian scrap at this level also signals that South Korean steelmakers are willing to accept higher levels in some cases to secure the import scrap tonnages they need. However, whether they will continue buying Russian scrap or not will be seen in the coming days. One South Korean source stated, “The Russian A3 grade scrap price has jumped from $415/mt CFR recorded two weeks ago to $427/mt CFR, and offers at $430/mt CFR are already heard in the market.”
There has been a rumour of an ex-US scrap deal done to South Korea this week, while the details have not been disclosed to the market. SteelOrbis believes either both parties are keeping the details very confidential or it is just a false rumour.
As anticipated by SteelOrbis last week, South Korean mills have started to increase their domestic scrap procurement prices. As of today, August 31, domestic A weight scrap prices at Hyundai Steel and Dongkuk Steel’s Incheon, Dangjin and Pohang plants are at KRW 497,000-515,000/mt ($369-383/mt), up by KRW 40,000/mt ($28-29/mt) week on week. Since the upward pressure from the supply side continues, South Korean mills still have room to increase their domestic scrap quotations in the coming weeks.
*Exchange rate fluctuations are taken into consideration when calculating the dollar-based price changes.
$1 = KRW 1,343.63
$1 = JPY 138.69