South Korea’s largest scrap consumer and steel major, Hyundai Steel, presented bidding for Japanese H2 scrap at JPY 40,500/t ($296), down JPY 12,500/t ($91), after a gap of almost two months. As per a SteelDaily report, Hyundai Steel’s proposed volume stood at 150,000 t, which is usually around 100,000 t.
The main reason Japanese suppliers did not enter into a contract was that the bid prices from Hyundai seem to be very low and exporters are not in favour of these prices compared with domestic offers. However, major importers of Japanese scrap like South Korea and Vietnam lowered their import volumes resulting in piled-up inventories in Japan, which is pulling down scrap prices.
Compared to the past, imports by Hyundai Steel are declining year after year: the company accounted for 59.8% of the import share in 2019, 55.5% in 2020, and 42.3% in 2021.
Currently, the domestic price of Japanese scrap is JPY 44,500/t ($326), which is JPY 4,000/t ($29) higher than Hyundai Steel’s bid. The price gap is very high but the suppliers who are facing trouble in inventory turnover need to export the material to South Korea and Vietnam where demand has been muted for a while. Therefore, growing inventory is exerting pressure on prices.
Domestic scrap market
Interestingly, major Korean mills will reduce scrap purchase prices by KRW 20,000/t ($15) from 27 July, as per reports. POSCO will cut prices for its Pohang and Gwangyang works, Hyundai Steel for Incheon and Dangjin, while Dongkuk Steel will trim prices for its Incheon plant for all grades of scrap.
Note: This article has been published in accordance with an article exchange agreement between SteelDaily and SteelMint.
Leave a Reply