South Korea’s largest scrap consumer and major steelmaker, Hyundai Steel, has seen its share of scrap inventories falling off year-over-year. As per a survey conducted by SteelDaily, currently eight major mills have 997,000 tonnes (t) of stock available with them.
Hyundai Steel accounted for a share of 47% among the eight mills at 473,000 t. The proportion of Hyundai Steel’s stocks dropped in 2021 to 57% from 64% in 2020 and 61% in 2019. The change in scrap procurement policy resulted in a decline in Hyundai Steel’s share.
Since last year, the cost competitiveness increased in scrap and so the company reduced inventory to source more of local scrap over imported material, which is the basic raw material for EAF. Also, Hyundai Steel knows that even if they reduce the inventory procurement their suppliers have a high level of stocks at yards and so it would not disturn the supply-demand balance.
Out of all the factories of Hyundai Steel, the Incheon plant witnessed the sharpest fall in stock levels. The average factory inventory was 214,000 t in 2018, which reduced to 180,000 t and 190,000 t in 2019 and 2020 respectively. Whereas last year it plummeted to 170,000 t. In April, 2022 it decreased to 110,000 t.
The Pohang works runs with 100,000 t of scrap inventory this year compared to 190,000 t in 2018. However, in April, 2022 it dropped to 90,000 t.
Meantime, inventory at the Dangjin works reduced after the company shut down the mini mill plant. However, its stock at 200,000 t in April remains relatively stable.
It appears that for every plant the strategy of stockpiling varies. With this, Hyundai Steel keeps on maintaining a low level of inventory majorly for the Incheon and Pohang works. In contrast, the competitors are not in favour of this as it seems to trigerring a hike in domestic scrap prices.
Note: This article has been published in accordance with an article exchange agreement between SteelDaily and SteelMint.
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