ASIA STEEL SCRAP DIGEST: S Korea mills continue to reduce scrap intake
South Korean mills are continuing to scale back their steel scrap imports amid a slide in local steel demand and production stoppages at some electric-arc furnace (EAF) mills, sources told Fastmarkets on Friday September 24.
- South Korean steelmakers take back-seat while Vietnam ramps-up buying
- Higher bids for scrap in China, with restocking efforts stepping up
- Offers for imported material to China remain steady.
Demand for steel scrap in South Korea has remained low in recent days amid tepid demand for steel products in the country, market sources said.
A vibrant steel market had underpinned South Korean import scrap prices through the second quarter of the year. But a slowdown in steel demand during the third quarter, which coincided with a spike in Covid-19 infection numbers in country at the start of July, has led to fewer import scrap bookings.
“Steel demand is still okay but it is down compared with June. That is why some steelmakers in Korea have been cutting their output by 10-20% in the second half of this year,” a steelmaker source in the country told Fastmarkets.
“Scrap prices are high and freight costs are high, so the raw materials supply at many mills has been reduced,” he added.
A Japanese scrap supplier source said that the two largest steel scrap-buying mills in South Korea have been totally out of the market over the past week.
Offers for base-grade H2 scrap were heard at ¥49,000-50,000 ($445-454) per tonne fob Japan earlier this week, equivalent to ¥53,500-54,500 per tonne cfr Korea, sources said. Bids were heard at just ¥45,000 per tonne fob this week, which sources said would be much too low for a deal to be concluded.
Bids for heavy scrap (HS) and shredded scrap were last heard by Korean mills at ¥57,500 per tonne fob and ¥56,500 per tonne fob respectively last week, but no exporters could supply at these prices given the rise in Tokyo Steel buy prices this week.
Purchases of H2 were heard at $490 per tonne cfr Vietnam this week, which sources said would work out at ¥47,000-47,500 per tonne fob.
Deep-sea cargoes were offered from the United States West Coast at $505 per tonne cfr Vietnam and at $520 per tonne cfr Bangladesh for HMS 1&2 (80:20) over the past fortnight, sources said. But with Vietnam’s appetite for scrap rising, South Korean consumers would be required to raise their buy prices to secure any material, they added.
Fastmarkets’ weekly price assessment for steel scrap, HMS 1&2 (80:20), deep-sea origin, import, cfr South Korea, was $495-510 per tonne on Friday, up from $490-500 per tonne cfr one week before.
The spot prices for steel scrap imported into China inched up on Friday with Chinese steelmakers stocking up ahead of the week-long National Day holiday at the start of October, market sources said.
“The scrapyards would normally be closed during the holiday. Traffic would also be heavy, possibly causing delays to logistics. Many mills are stocking up on scrap so they can operate normally during the holiday,” a Chinese scrap industry analyst based in Beijing told Fastmarkets.
Bids for imported HRS101-grade scrap were heard at $530 per tonne cfr north China on Friday, up by $10 per tonne from bids heard on Thursday. Offers from Japan for similar material remained at $600 per tonne cfr China on Friday, sources said.
Fastmarkets’ calculation of the steel scrap index, heavy recycled steel materials, cfr north China, was $529.33 per tonne on September 24, up by $0.58 per tonne day on day.
Some buyers who had no interest in booking import scrap cargoes gave indicative bid prices of $510 per tonne cfr north China. The tighter production curbs in China were putting pressure on scrap demand in the country, according to sources.
“The scrap consumption rate in our mills is much lower now compared with several weeks ago, due to the recent production curbs. Our scrap inventory level is still reasonable, so we don’t really need to stock up for the National Day holiday,” a mill source based in Hebei province told Fastmarkets.
“We are getting mixed sentiment in the domestic scrap market. Some need to stock up, but we are also aware that some EAF mills in Jiangsu, Zhejiang, Guangdong and Guangxi provinces have suspended their production due to the production cuts and electricity rationing,” the industry analyst said.
“Apart from those, some blast furnaces in those regions are undergoing maintenance, which we heard could last until October,” he added.
Fastmarkets’ weekly price assessment for steel scrap heavy scrap, domestic, delivered mill China, was 3,640-3,720 yuan ($563-576) per tonne on September 24, compared with 3,670-3,710 yuan per tonne on September 17. Disregarding VAT, that puts the China domestic scrap price at $490-501 per tonne.