- Early May holidays disrupt scrap availability
- Aggressive competition ensues to procure scrap
SteelDaily: The combined ferrous scrap inventory of eight major South Korean steel mills fell by approximately 1% to 799,000 tonnes (t) this week from 809,000 t last week. This marks the third weekly decline in May.
Region-wise inventory
Central region: The central region’s steel scrap inventory increased by approximately 2% w-o-w to 432,000 t.
Southern region: The southern region’s scrap inventory decreased by approximately 5% w-o-w to 344,000 t.
The regional variation in inventory levels appears to stem from company-specific factors such as production volumes relative to stocks and ongoing maintenance activities.
A market participant noted, “Despite it being the peak season, inventory levels remain low. In previous years, rising prices would typically lead to a surge in supply, but this time, there was only a brief uptick at the start before momentum quickly faded.”
Market update
The impact of the sharp drop in purchase prices in April, coupled with reduced scrap supply due to early May holidays, appears to persist. In response, steelmakers steadily increased purchase prices to avoid supply-demand imbalances. However, suppliers continued to indicate a lack of available stock.
Amid ongoing material shortages, some suppliers aggressively sourced scrap, even offering prices above steelmakers’ purchase rates to secure supply.
While further price hikes remain possible due to declining inventories at steel mills, any decision to raise unit prices will likely be approached with caution, given the current combination of weak finished product prices and mounting cost pressures.
Note: This article has been written in accordance with a content exchange agreement between SteelDaily and BigMint.
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