Steel demand supports South Korean scrap imports

Posted on 28 May 2021

South Korean mills capitalised on a short-term price correction in early-mid-March and procured a large portion of their requirement for April, as they expect steel demand to remain strong during the peak season for construction and shipbuilding industries.

South Korea imported 412,000t of ferrous scrap in April, a rise of 30pc on the month but a 6pc fall on the year. Mills focused on origins that were able to supply large volumes of scrap while seaborne prices dropped. Many of them were able to secure their requirements.

Imports from Japan were 273,000t, up by 14pc from March but down by 1pc on the year. South Korean mills actively sought Japanese scrap in early-mid-March, when prices for H2 went down by ¥3,900/t from ¥43,700/t to ¥39,800/t fob Japan. Japanese suppliers sold large volumes of scrap as they looked to offload stock. Buyers' interest for Japanese scrap remained strong even after prices rebounded to ¥40,300/t in late March, at which point suppliers became unwilling to sell at lower prices.

Shipments from the US were almost seven times higher on the month at 83,000t in April, but it was 16pc lower on the year. A couple of bulk scrap cargoes were booked between end of January-February, when US scrap prices were low, for April arrival in Korea. Mills showed great interest for bulk scrap cargoes in February in anticipation that seaborne scrap prices will soon rebound.

Scrap imports from Russia fell by 63pc on the year to 16,000t, because of a lack of supply from far east Russia for the north Asian market. Korean mills bought all offers that were made available to them.

Imports for scrap from other origins increased by 93pc on the year to 39,000t. This volume was 5pc below March's levels and showed that mills were eager to buy any offers on the market, when prices fell in a short-term correction.

Imports in January-April totalled 1.32mn t, a fall of 23pc on the year. But mills' requirement in the coming months will likely significantly increase to exceed last year's levels, when demand was largely impacted by the pandemic, because of a rise in overseas and domestic steel demand.

South Korean mills have been more active in the market this year. Some mills attempted to increase domestic scrap consumption rates, but local supply is unlikely sufficient, particularly for premium grades because of increased competition from China.

Source : Argus