South Korea: Ferrous scrap inventory at steel mills rises around 8% w-o-w

Ferrous scrap inventories with South Korean steelmakers seem to be growing w-o-w. This week, scrap holdings of the eight steelmakers totalled 879,000 tonnes (t), an increase of 67,000 t or 8% from the previous week.

While the possibility of a price drop is high, steelmakers’ stock holdings are at a comfortable level, so a price drop is likely this week. Steelmakers are taking advantage of the current low inventory scenario to try to lower costs. They are concerned that a quick decrease in prices may result in a rush in quantity at a time when there is already a gap. In fact, Hyundai Steel announced price cuts for some items in Incheon and Dangjin.

Region-wise inventory

According to experts, the moderate growth in inventory with the southern steelmakers compared to steelmakers in the metropolitan area indicates that suppliers in the southern region have already begun to curb the increase in distribution. Although the fact that the market is heading toward price cuts as a result of low inventory, sporadic variables are constantly occurring in the region.

• Metropolitan region:  Steelmakers in the metropolitan area, especially Dongkuk Steel, have seen an increase in inventory. Dongkuk Steel’s inventory increased by more than 50% in one week. This is due to the effect of the maintenance of the Pohang plant, which continued until February. As Dongkuk Steel’s inventory increased significantly, the inventory of steelmakers in the metropolitan area increased by 17.53% in one week to 523,000 t.
• Southern region: Total inventories with steelmakers in the southern region has decreased somewhat. There is no disagreement that the current inventory level is appropriate. While daily stocking has been steadily maintained since early February, most steelmakers in the southern region are maintaining a comfortable stock situation. The relaxed inventory situation becomes clearer when checking the same stock price as last year. Compared to the same week last year, the current inventory is about 22.3% higher.

Company-wise inventory status

• Hyundai Steel, YK Steel & POSCO: Inventory growth at Hyundai Steel is not significant. Hyundai Steel’s inventory in both Incheon and Dangjin is estimated to be similar to that of Jeonju. It is said that Hyundai Steel has already entered into inventory control such as limiting stocking based on relatively ample inventory of 356,000 t, a slight decrease of about 3% from the previous week. Inventories at YK Steel and Hyundai Steel Pohang decreased. POSCO did not witness any change in inventory from the previous week.
• Hwan Steel: Hwan Steel also saw a sharp increase in inventory of 23% during the week.
• Korea Steel, Daehan Steel:  Korea Steel’s inventory increased by 2% from the previous week, while Daehan Steel’s inventory remained at a similar level as last week.
• Dongkuk Steel: Dongkuk Steel’s Incheon Works notified its suppliers on 22 February of a warehousing restriction as demand for ferrous scrap decreased due to major repairs to the 100 t electric furnace. Dongkuk Steel’s Incheon Works will restrict warehousing for 15 days from 27 February to 10 March. Sources in the Incheon Works informed mentioned that warehousing restrictions are scheduled to start on 27 February but may be implemented earlier due to indoor floor construction.

Note: This article has been published in accordance with an article exchange agreement between SteelDaily and SteelMint.