South Korean steel producer POSCO has kept its bids for Japanese scrap stable once again this week. A source at a major South Korean steelmaker commented, “Due to the lower HMR (hot metal ratio), they [POSCO] consumed lots of scrap rather than iron ore. That is why they still buy from Japan. Low stock [levels] made POSCO keep buying from Japan as much as possible.” Another source drew attention to the general market trend in South Korea, saying, “Unlike overseas, South Korean domestic scrap prices are still falling. Some mills announced a second price decrease in December. The price had already declined twice in October and twice in November. It looks like it will drop twice or more in December. This is not the usual situation during this season, but it is happening, proving that the market is that bad.”
POSCO has shared bids for Japanese HS grade scrap at JPY 50,000/mt ($326/mt) CFR, stable as compared to November 29, though, amid the fluctuation of the Japanese yen against the US dollar, dollar-based prices have dropped by $7/mt over this period. The producers’ offers for shindachi grade scrap are at JPY 49,000/mt CFR or $319/mt CFR, dropping by $7/mt on US dollar basis since November 29.
POSCO also shared bids for Japanese shredded scrap at a stable level of JPY 48,000/mt ($313/mt) CFR, decreasing by $7/mt on US dollar basis as compared to the previous level announced at the end of November. The JPY 48,000/mt level indicates FOB-based prices for Japanese shredded scrap are at around JPY 45,000/mt or $293/mt, with freight between South Korea and Japan being at around JPY 3,000/mt, and with the dollar-based scrap price down $7/mt.
Considering the gap between ex-Japan shredded and H2 scrap prices at around JPY 3,000-4,000/mt, this means indications for ex-Japan H2 prices for South Korea are at JPY 41,000-42,000/mt FOB or $267-273/mt FOB. This dollar-based H2 scrap price range on FOB basis is $6-7/mt lower as compared to November 29.
$1 = JPY 153.43