South Korean steelmaker POSCO’s bids for Japanese scrap have been kept unchanged for the fourth week, with the dollar-based prices dropping week on week due to the depreciating Japanese yen. POSCO remains the only South Korean producer currently importing scrap, while it has cut its domestic scrap purchase prices. The import strategy of South Korean mills is the result of their need for higher-grade scrap. Meanwhile, in the local South Korean scrap market, producers have cut their purchase prices further this week. Hyundai Steel is considering shutting down one of it is plants in Pohang, with the management’s final decision being awaited. The cheaper Chinese steel in the region as well as the slow construction market are exerting significant pressure on South Korean producers this year. Market sources say that South Korea’s scrap imports this year will be below last year’s volume. In the January-August period this year, South Korea imported 1,499,491 mt of scrap, with 1,098,843 mt of this tonnage from Japan. Last year, South Korea’s total scrap imports amounted to 3,766,830 mt.
POSCO has shared bids for Japanese HS grade scrap at JPY 51,000/mt ($327/mt) CFR, stable as compared to last week. POSCO’s dollar-based bids have declined by $7/mt since last week. The producers’ offers for shindachi grade scrap are at JPY 50,000/mt CFR or $321/mt CFR, $7/mt lower week on week.
POSCO’s bids for Japanese shredded scrap have moved sideways at JPY 49,000/mt ($314/mt) CFR, down $6/mt week on week. The JPY 49,000/mt level indicates FOB-based prices for Japanese shredded scrap are at around JPY 46,000/mt or $295/mt with freight between South Korea and Japan at around JPY 3,000/mt, $1/mt higher week on week.
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 42,000-43,000/mt FOB or $269-276/mt FOB. This dollar-based H2 scrap price range on FOB basis is $6/mt lower as compared to last week.
$1 = JPY 155.66