- Billet imports may rise on rising production costs
- Japanese scrap contract signed at lower price
Steelmakers are increasingly viewing the recent stability in domestic scrap prices as a sign that the market may have reached a short-term peak.
A major steelmaker recently signed a contract for 13,000 t of Japanese scrap, scheduled for delivery in two batches during June and July. The deal was concluded at JPY 54,000/t ($339/t) FOB, down by around JPY 500/t ($3/t) from the previous contract, indicating a slight easing in Japanese scrap prices.
Despite the recent increase in Japanese scrap bookings, domestic scrap remains competitively priced at around KRW 500,000-600,000/t ($331-398/t), limiting the likelihood of a significant rise in imports as steelmakers continue to face margin pressure.
At the same time, mills are increasingly evaluating billet imports as an alternative raw material. Several producers have begun reviewing import opportunities, supported by the growing cost advantage of imported billet over domestically sourced steelmaking inputs.
Recent offers for Chinese billet were reported at $480-490/t CFR, equivalent to roughly KRW 740,000/t ($490/t). In contrast, domestic billet production costs are estimated to exceed KRW 800,000/t ($530/t). As production costs continue to rise due to higher scrap prices, imported billet has become increasingly competitive, prompting greater interest among steelmakers.
An industry source commented, “Domestic production costs have risen significantly alongside scrap prices. The competitiveness of imported billet has improved considerably, making additional imports more likely in the near term.”
While some market participants believe prices could correct in the coming months, the prevailing view is that the domestic scrap market is currently approaching a short-term peak.
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