Posco returns to steel scrap markets after long absence

South Korean steelmaker Posco has returned to the market for steel scrap from Japan and Korea in the past week after taking a hiatus of around three months, market sources told Fastmarkets.

Korea’s largest steel producer stopped buying scrap in April amid dismal steel demand, particularly in the higher-grade steel segment.

Since then, the steelmaker has also delayed the resumption of production from its No 3 blast furnace (BF) in Gwangyang following the completion of maintenance works which were scheduled to end by late May.

The mill’s return to the Japanese market comes at a time of falling prices for steel scrap in the East Asian nation, with consecutive price drops in the past three weeks.

Posco purchased a bulk cargo of Japanese shredded scrap at ¥27,000 ($251) per tonne cfr South Korea in the middle of last week, Fastmarkets was told.

Fastmarkets’ weekly price assessment for steel scrap shredded, export, fob main port Japan was ¥25,000 per tonne fob on Wednesday July 8. Freight costs for scrap in bulk from Japan to South Korea are ¥2,000-2,500 per tonne depending on origin and destination.

“Posco entered the market and purchased Japanese shredded scrap. They seem to have decent [steel] demand from August,” one Japanese export source said.

The mill was also heard to be inquiring for material in the South Korean domestic market, which has also seen steep price cuts in recent weeks, according to one South Korean source.

South Korea produced 27.41 million tonnes of crude steel in the January-May period, down by 8.9% year on year, according to the Korea Iron and Steel Association (KOSA).