South Korea: Ferrous scrap inventory drops for 4th consecutive week

• Small, medium mills face weak inventory recovery
• High prices inhibit buying by smaller enterprises

SteelDaily: The combined ferrous scrap inventory of eight major South Korean steel mills fell by approximately 4% to 765,000 tonnes (t) this week from 799,000 t last week. This marks the fourth weekly decline in May.

Region-wise inventory

Central region: The central region’s steel scrap inventory increased by approximately 6% w-o-w to 406,000 t.

Southern region: The southern region’s scrap inventory decreased by approximately 2% w-o-w to 338,000 t.

Although overall inventory levels remained similar to those in the first week of April, trends varied by company. Large steelmakers maintained similar or higher volumes, while stocks at small and medium-sized steelmakers remained relatively low.

In particular, small and medium-sized steel mills in the southern region experienced sluggish inventory recovery amid an uptrend in prices. Their production volumes were limited overall but relatively high compared to inventory levels, so stock accumulation proceeded at a slow pace.

On the other hand, large steelmakers that have cut production and extended plant downtimes are believed to have maintained or even slightly increased their inventory levels.

Market update

According to one market participant, “There have been three rounds of purchase price hikes since May, along with end-of-month incentives, which have contributed to a modest rise in inventory m-o-m. However, the market is still far from achieving a true balance between supply and demand.”

He added, “Some mills with low inventory levels may need to reassess their procurement strategies, especially with seasonal factors such as early June holidays and the upcoming rainy season likely to affect logistics and demand.”

In the near term, scrap buying by small and medium-sized steelmakers is expected to be higher than larger enterprises. Industry observers warn that without improvements in supply conditions, the challenges caused by inventory imbalances may intensify for individual companies.

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