South Korea’s leading EAF steelmaker – Hyundai Steel has been witnessing the increasing number of long-term contracts for its imported scrap purchases rather than spot buying in CY18. The steelmaker is transforming its scrap purchases into long-term contracts as it places top priority towards the stability and assurance for the purchase of its key raw material, imported scrap.
Hyundai Steel recently started long-term contracts for Russian scrap after Japan. As per updates received on this, Hyundai Steel was into a discussion with Russian scrap suppliers for long-term contracts since early this year. However, the contracts have been confirmed towards closing last week amid high Japanese scrap prices and more competitive Russian scrap offers. For almost first five months period of CY18, Russian scrap prices remained mostly to upper side as compared to global prices.
Hyundai Steel is one of the largest importers of ferrous scrap in South Korea. It purchases monthly around 200,000-250,000 MT scrap from Japan while around 50,000 MT from Russia. Company’s long-term contract volumes for imported scrap from Russia are now estimated at 20,000 MT per month.
Hyundai Steel strongly believes that sharp price fluctuations and supply disparities from suppliers for key raw materials like ferrous scrap are highly critical in steelmaking and thus stability in supply can be achieved effectively through such long-term contracts.
The steelmaker has already started shifting to long-term contracts for imports from largest supplier Japan. In 2017, Hyundai purchased around 2.4 MnT ferrous scrap from Japan. Out of which around 1 MnT scrap was purchased through the long-term contracts and remaining 1.4 MnT through spot purchases from common yards. However, this year it is expected that spot purchases will be reduced below 1 MnT while long-term contracts and Joint yard purchases will expand upto 1.4-1.5 MnT of scrap from Japan.
Hyundai steel resumed bids for Japanese scrap last week – It seems that Hyundai has normalized its scrap imports from Japan last week. After almost 3 week’s period, last week Hyundai presented bids for Japanese scrap with a hike of JPY 2000/MT (USD 18) for high grade and JPY 1000/MT (USD 9) for H2. The increased spread between bids for high grade and H2 scrap indicated steelmaker’s increased inclination towards high-grade scrap. In this bidding, Hyundai steel heard to have purchased 40,000 MT HS and 30,000 MT H2 from Japan while bids for H2 and HS were at JPY 34,000/MT (USD 312) and JPY 38,000(USD 348), FoB Japan respectively.
~Inputs from Steel Daily
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