South Korea – one of the largest scrap importers observed a slight fall in its ferrous scrap imports by 7% on a monthly basis and stood at 0.26 mn t in Aug’20. Monthly imports have hit ten-years low in Aug’20, according to data maintained with SteelMint.
Similarly, on a yearly basis, import volumes are down by 32% from 0.38 mn t during the same month in the previous year.
Domestic demand for steel and scrap was limited by the slowness of South Korea’s economy. Due to Covid pandemic resulted in halting of infrastructure projects as the country failed to attract much overseas investment. Mills cut production to reduce operating costs and also raised domestic scrap requirements but lowered scrap collection prices.
Imports from Japan fell 26% m-o-m – Japan remained the largest ferrous scrap supplier to South Korea, however imports fell by 26% m-o-m to 0.14 mn t from 0.19 mn t in Jul’20. SteelMint’s assessment for Japanese H2 scrap export stood at JPY 23,350/t ($221) FoB in Jul’20 against JPY 25,500/t ($241) FoB in Jun’20.
Shipments from Russia increased by 25% m-o-m – Imports to Russia have risen 25% m-o-m and stood at 0.05 mn t in Aug’20 as compared to 0.04 mn t in Jul’20. South Korean mills increased their preference for Russian grades and the USA during July-August, due to high Japanese scrap prices.
Quantity in mn t
Source: SteelMint stats & customs data
Outlook – Hyundai Steel in its quarterly report highlighted that construction and auto demand to recover by investment and resumption of auto production. In addition to it, revival in the market is expected by large-scale LNG shipbuilding. South Korean steel giant POSCO recently declared that its mills have returned to full capacity levels of operations in order to meet the anticipated rise in global steel demand in H2 CY’20. All these factors along with lower scrap inventories are likely to increase South Korea ferrous scrap imports.
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