South Korea: Ferrous scrap inventory hits nearly 3-month high

• Inventories rise for 5th consecutive week
• Plant shutdowns, maintenance cause surge

SteelDaily: The cumulative ferrous scrap inventory at eight major South Korean steel mills increased for the fifth straight week, by 39,000 tonnes (t) (4.7%). As of the second week of July, inventories totalled an almost three-month high of 900,000 t against 861,000 t in the previous week.

Despite production curbs, domestic steel scrap stockpiles climbed up to 900,000 t – a new high since late April.

The rise in inventory is attributed to lower scrap consumption, reduced steel production, and pre-emptive stocking ahead of regular summer maintenance.

Region-wise inventory

The southern region led the overall growth in inventories this week, mainly due to restocking by large electric furnace mills. In contrast, inventories at small and mid-sized mills stayed mostly unchanged.

Central region: Inventory levels increased by approximately 5.5% w-o-w to 556,000 t from 527,000 t.

Southern region: A sharper increase of 7.7% was seen, with volumes rising to nearly 360,000 t versus 334,000 t last week.

Market update

Scrap consumption slowed temporarily as several steelmakers shut down steelmaking and rolling lines from mid-July to early August in both the metropolitan and southern regions, leading to a rapid short-term inventory build-up.

However, in the southern region, some mills have recently resumed operations after a pause, which could result in a gradual drawdown of inventory in the coming weeks.

A market participant noted, “If inventory accumulation continues during the off-season, it could add pressure on operations. However, with production also being scaled back, some mills are unlikely to exceed their current intake limits.”

The industry sees this trend as part of the usual seasonal supply-demand cycle, but participants also noted that steelmakers may revise their scrap buying strategies if inventory levels cross a critical threshold.

Given that current inventory levels exceed 900,000 t, steelmakers are expected to maintain a cautious buying approach. With sufficient stock on hand, aggressive purchases appear unlikely in the near term.

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