South Korea import scrap demand wanes amid falling local market, Japan price

A likely decline in the South Korea domestic steel scrap price and lower Japan export and local prices has resulted in a drop in buying interest in South Korea in the week to Friday November 12, sources told Fastmarkets.

South Korea bids lower for Russia import scrap
Tokyo Steel announces another drop in domestic scrap buy price
Buying interest for scrap minimal in China amid volatile finished steel markets
South Korea
Korean scrap prices have been supported in recent months by strong domestic steel demand due to healthy construction activity in the country.
But with weather turning wintry in the country over the coming months, with January temperatures often below -10 degrees celsius in capital city Seoul, demand from construction is also expected to fall, sources said.
Sentiment in South Korea has also been buffeted by recent declines in the Japanese export scrap market. South Korea was last heard to have bid for H2 - and bought small tonnages- at ¥51,500 ($452) per tonne fob Japan, with freight costs of around ¥4,000 per tonne, last week.
This week, a major trading source said on Wednesday that Korea could now “easily” buy H2 at ¥52,000 per tonne fob from some suppliers, even if most suppliers were offering higher.
A South Korean steelmaker source told Fastmarkets his company would lower its domestic scrap price by another 15,000 Won ($13) per tonne on Tuesday November 16.
For material located further afield, a bid for Russian A3 scrap was heard at $515 per tonne cfr Korea on Thursday, down sharply from the last deal heard for such material at $549 per tonne cfr Korea in late October.
With Vietnamese buyers able to pay a maximum of $545-550 per tonne cfr for deep-sea heavy melting scrap 1&2 (80:20) this week, sources said that South Korean workable prices would be $15-20 per tonne lower for the same material.
Fastmarkets’ weekly price assessment for steel scrap, HMS 1&2 (80:20), deep-sea origin, import, cfr South Korea was $520-530 per tonne on Friday, widening downward by $5 from $525-530 per tonne one week prior.
Japan
There was a further downward adjustment in the Japan local steel scrap market on Friday when Tokyo Steel, Japan’s largest operator of electric-arc furnaces, announced another drop in its purchase prices.
Tokyo Steel’s buy price for domestic steel scrap was reduced by ¥500 per tonne at all its steel works for all grades on Friday.
Effective November 13, Tokyo Steel will pay ¥56,000 per tonne for H2 scrap delivered to Tahara works, ¥54,000 per tonne at Okayama works and ¥55,000 per tonne at Kyushu works. It will also pay ¥55,000 per tonne at Utsunomiya works and ¥51,000 per tonne at Takamatsu steel center.
China
Buying interest for steel scrap imported into China remained low on Friday amid volatility in finished steel prices.
“The uncertainties in the finished steel products markets are very high currently, so we are not very interested in booking any [scrap] cargoes. We feel it would be better to wait and see,” a mill source based in Hebei province told Fastmarkets.
“Finished steel prices have been jumping up and down this week, but the domestic scrap market in China is still on a downtrend. Buying interest from buyers for imported scrap is quite low under these circumstances,” a Japanese exporter source said.
Fastmarkets’ weekly price assessment for steel scrap heavy scrap, domestic, delivered mill China was 3,370-3,550 yuan ($527-555) per tonne on Friday, down by 100-110 yuan per tonne from 3,470-3,660 yuan per tonne a week earlier. Disregarding value-added tax, that puts the China domestic scrap price at $466-491 per tonne.
Bids for imported HRS101-grade steel scrap were heard at $480 per tonne cfr north China on Friday. Key market participants believed the prevailing market level for the material would be $480-495 per tonne cfr north China on the day.
Fastmarkets’ calculation of the steel scrap, index, heavy recycled steel materials, cfr north China was $488.75 per tonne on Friday, down by $1.25 per tonne from a day earlier.
Offers for heavy scrap (HS) from Japan were at $550-560 per tonne cfr China on Friday, according to sources.
“Offer prices from Japan [for HS] dropped recently. One of the reasons is that shipping costs have been falling,” a second Japanese exporter source told Fastmarkets.

Lee Allen

lee.allen@fastmarkets.com

Tianran Zhao

tianran.zhao@fastmarkets.com

Published

Lee Allen

Tianran Zhao

November 12, 2021

12:08 GMT

London, Shanghai