Over the past week, South Korean steel producer POSCO has kept its bids for Japanese scrap stable. Following the capacity utilization cuts announced by two major South Korean producers, there is significant downward pressure on the domestic scrap market. SteelOrbis has already reported that South Korean scrap suppliers have tried to export some of the excess tonnages over the past months, but these efforts have given little fruit. South Korea’s import scrap market has slowed down significantly this year as domestic mills have decided to meet their needs from their domestic market. Over the past year, the share of South Korean mills’ purchases of scrap from their local market has occasionally reached 90 percent. They imported 1.5 million mt of scrap in the January-August period, 73 percent of it from Japan. While Japan’s share has not changed year on year, estimations indicate that South Korea’s import scrap tonnages have dropped by more than 50 percent this year.
POSCO has shared bids for Japanese HS grade scrap at JPY 50,000/mt ($333/mt) CFR, up by 10/mt as compared to last week. The producer’s offers for shindachi grade scrap are at JPY 49,000/mt CFR or $326/mt CFR, $9/mt higher week on week.
POSCO has also shared bids for Japanese shredded scrap, stable at JPY 48,000/mt ($320/mt) CFR, while increasing by $10/mt on US dollar as compared to the previous level announced last week. The JPY 48,000/mt level indicates FOB-based prices for Japanese shredded scrap are at around JPY 45,000/mt or $300/mt, with freight between South Korea and Japan being at around JPY 3,000/mt, up $10/mt week on week.
Considering the gap between ex-Japan shredded and H2 scrap prices at around JPY 3,000-4,000/mt, this means indications for ex-Japan H2 prices for South Korea are at JPY 41,000-42,000/mt FOB or $273-380/mt FOB. This dollar-based H2 scrap price range on FOB basis is $8/mt higher as compared to last week.
$1 = JPY 150.17