South Korea’s leading EAF steelmaker – Hyundai Steel has suspended its bids for Japanese scrap import at least for next two weeks. As per latest update received today (20th Apr’18) on this, Hyundai Steel hasn’t presented a bid for any of the grade of Japanese scrap for this week. Also, the period of discounting scrap imports was not determined by the company.
As per sources, Hyundai Steel is still active in buying high-grade scrap owing to less availability and usage in making of special steel. However, it might not actively buy H2 and other such medium and low grades.
Reasons behind suspending bids for Japanese scrap –
1. Balance of contracts and rising inventories – According to sources, a lot of contracts are already in balance with the company. On the other hand, steel inventories with the steelmaker are rising sharply since last few weeks while available scrap inventories are sufficient to keep operating for at least next few weeks. Over continuing trend of shipbuilding, Hyundai could have stopped scrap purchases. The company may possibly decide when to resume the bidding for scrap import, depending on number of completion of contracts during upcoming few weeks.
Last week Hyundai steel’s bids for Japanese scrap dropped to 5 month low, following a sharp fall in bids for Japan’s ‘Kanto Tetsugen’ monthly scrap export tender. Hyundai presented last bid for H2 on 13th Apr’18 at JPY 33,500/MT (USD 312), FoB Japan which was seen at the same level earlier to this on 20th Nov’2017.
2. Holidays for Golden week in Japan – Hyundai Steel’s bids are expected to remain suspended for one month’s time. Japan will observe Golden Week holiday from late next week to May 6th. Amid a slowdown in activities during holidays, Hyundai is likely to resume bids for Japanese scrap import in the mid-May ’18. However, no official clarity about a presentation of bids during golden week holidays is received yet.
Hyundai steel monthly purchases on an average 200,000-250,000 MT of Japanese scrap. Out of which more than 50% scrap is being purchased by means of import bidding. Hyundai steel seemed to have reduced spot bidding of scrap while it has been increasing the purchases from its 20 joint yards and numbers of long-term contracts in Japan.
Amidst absence of Hyundai Steel, which is the largest importer company of Japanese scrap, Japan’s supply of scrap likely to surge in the market which may result in corrections in the prices further.
3. Falling domestic scrap prices in South Korea – Many of the leading South Korean steel makers like Hyundai, Dongkuk, SeAH, and Posco have recently reduced domestic scrap purchase prices by the range of KRW 10,000-15,000/MT (USD 9-14) for this week again.
Japan’s Tokyo Steel fetches JPY 34,500/MT (USD 321) for H2 at largest work in central Japan-Tahara. While the same grade fetches JPY 33,000/MT (USD 307) at Utsunomiya works in Kanto region in north Japan. Average EAF steelmaker’s scrap purchase prices from Tokyo, Osaka and Nagoya regions assessed at JPY 32,800/MT for H2 and at around JPY 36,800/MT for New cutting press respectively.
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