The world’s sixth-largest steel producer, South Korea, has been increasing imports of metallic products such as pig iron and hot briquetted iron (HBI) in anticipation of supply issues that may erupt in the medium to long term, with China increasing seaborne purchases of high grade ferrous scrap, especially from major exporter Japan.
China cleared the decks for imports of recycled steel materials -ferrous scrap -from 1 Jan’21 and total imports – a bulk of it comprising HRS 101 material from Japan -have reached nearly 380,000 t in the Jan-Jul’21 period, as per SteelMint data.
Imports up sharply in Jul
Pig iron imports by South Korea stood at 140,000 t in 2020, while imports reached nearly 60,000 t in the Jan-Jun’21 period. Jun imports had slumped below 5,000 t but shot up to over 17,000 t the following month.
Russia is the predominant exporter to South Korea followed by Brazil and Japan. Incidentally, South Korea – one of the largest consumers of seaborne ferrous scrap – has increased sourcing scrap from Russia and the US of late, although Japan still remains the top exporter. This confirms the fact that supply concerns following China’s entry into the scrap import market have nudged Korea to look to diversify sources of scrap supply.
Export deal from India
Interestingly, as South Korea ramps up metallic imports to sustain surging domestic demand for steel, India could tap into this emerging opportunity. As per SteelMint reports, an India merchant pig iron ore producer has concluded a 30,000 t pig iron (steel grade) export deal to South Korea at around $585/t on CFR basis on 1st week of Aug ,for which cargo was shipped on 26th Aug’21.
This is the sole export deal to Korea recorded from India this year. However, SteelMint data shows India’s pig iron exports to South Korea were fairly regular in the 2010-2015 period. Exports in 2010 had been recorded at 200,000 t before surpassing the 300,000 t mark in 2014. However, shipments from India slumped to well below 100,000 t in 2015 before drying up altogether from 2016 onwards.
India has resumed exports to Korea after a gap of five-odd years. It would be interesting to see if the trend continues. South Korea produced 6.1 mn t of steel in Jul’21, as per worldsteel data, and domestic demand from the construction and shipbuilding sectors is surging as slow recovery from COVID continues. The demand for steelmaking raw materials is on the rise. It is, therefore, likely that pig iron export volumes from India could increase in the short term.
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