Both major South Korean steel mills Hyundai Steel and POSCO have decided not to announce new bids for Japanese scrap for the fourth week in a row. South Korea had holidays on May 1 and May 5, and so market players report that it has been a fairly quiet week. A source from a domestic producer stated, “South Korean mills are not looking to buy scrap from overseas due to the good flow of domestic scrap and mills have announced further price drops mostly this week.” Finished steel demand in South Korea is slightly better than moderate but due to decreasing scrap prices demand may slow down. The same player added, “I believe steel prices are destined to drop as well. Our domestic price did not go up as high (as in the international market), so it did not drop when everywhere else was weakening.”
Hyundai Steel reduced its domestic A weight scrap prices at its Incheon and Dangjin plants by KRW 10,000/mt ($7.9/mt) today to KRW 682,000/mt ($537/mt), while Dongkuk Steel’s reduction for the same grade at both its plants in Incheon and Dangjin was KRW 10,000/mt ($7.9/mt) this week to KRW 682,000-695,000/mt ($537-547/mt). “The scrap grades available in the local South Korean market are similar to the ones we import from the US and Japan. Hence we can solely rely on domestic scrap supply when the local price is more attractive,” a source from a Souıth Korean mill commented.
Japan was mostly out of the international scrap market due to its Golden Week holidays. They are expected to return to the market on Monday, May 9. A Kanto export tender is expected to be held in the coming week, which will give a better signal for H2 scrap prices. Since both South Korean and Taiwanese buyers have not concluded any deals from Japan this week, the SteelOrbis reference price for ex-Japan H2 scrap has remained stable week on week at JPY 64,000-68,000/mt ($491-521/mt) FOB. The fluctuation of the Japanese yen is very small this week, and so dollar-based prices have remained stable too.
$1 = KRW 1,270.28
$1 = JPY 130.45