South Korea, a leading ferrous scrap importing country, is exhibiting mixed sentiments from both steelmakers and retailers. Market participants expect that the faster the price cut, the stronger the rebound is likely to happen in mid-May. However, some other market participants contest this outlook, according to a SteelDaily report.
Market might go up
Scrap inventories at mills are limited. Mills need to pile up the stock which can lead to a price hike in mid-May and can create a supply shortage for domestic scrap. Besides, it is likely that global scrap prices could rebound after the Ramadan and Golden Week end in early May owing to a pick-up in demand.
Moreover, the purchase prices in Apr declined sharply for major mills like POSCO, Hyundai Steel and SeAH Besteel due to low demand amid factory accidents and repairs as well as lack of construction activities.
However, it has been forecast that in May the market would be different as demand will normalise in South Korea.
Rebound an expectation
It is believed that transportation issues could resurface in the market in May because of scrap adjustments. But a few market insiders opine that distribution is highly likely to remain stable due to the peak season.
A steelmaker source said: “If there is no sign of a rebound then it is unlikely that yards will take the risk of stockpilling due to high prices.”
Also, large bulk vessels are gaining attention in the international market. Dongkuk’s two cargoes, Hyundai Steel’s one cargo and POSCO’s one or two cargoes might get delivered in May. Demand is expected to improve, but it seems insufficient to hold the upward market momentum.
Currently, it is difficult to predict the mid-May market but, irrespective of a rebound, mid-May is likely to be affected by the pricing policies of steelmakers. If the prices continue to drop in Apr then it will reach the bottom sooner than expected.
NOTE: This article has been published under an exchange agreement between SteelDaily and SteelMint.
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