- Demand decline leads to inventory buildup
- May demand expected to be weaker than usual
SteelDaily: The combined ferrous scrap inventory of eight major South Korean steel mills rose by approximately 2.7% to 929,000 tonnes (t) this week from 904,000 t last week. This marks the fifth consecutive week with an increase.
The increase was slightly lower than the previous week. With product demand continuing to shrink, inventory is accumulating primarily at certain steel mills, raising concerns about a growing imbalance between supply and demand in the market.
Additionally, this is the first time since the third week of December 2023 that inventory has surpassed 920,000 t.
Region-wise inventory
Central region: The central region’s steel scrap inventory increased by approximately 5% w-o-w to 512,000 t.
Southern region: The southern region’s steel scrap inventory remained stable w-o-w at 417,000 t.
The inventory increase is largely concentrated in a few steel mills, while others continue to sustain consistent purchasing activity. This indicates that the variation is likely driven by individual company strategies rather than a broad-based increase in market-wide inventory.
Market update
The current inventory level is approximately 6.5% higher y-o-y, rising from 872,000 t. In contrast, rebar sales in Q1CY’25 declined from about 1.78 mnt last year to 1.55 mnt this year, marking a y-o-y decrease of roughly 13%. As overall demand weakens, it appears that warehousing is outpacing shipments, leading to a buildup in inventory.
A market participant noted that, “while companies are securing supplies amid recent declines in unit prices, inventories appear to be rising due to warehousing outpacing both shipments and production. They also observed a tightening in steel scrap availability in the market and anticipate that demand in May may fall short of typical seasonal levels.”
Note: This article has been written in accordance with a content exchange agreement between SteelDaily and BigMint.
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