Since last few weeks, major EAF steelmakers in South Korea have shifted their attention from Japanese scrap to USA bulk scrap in order to stabilize supply–demand for October month. South Korean steelmakers have actively booked US cargoes amid expectation of tightening supply from USA in upcoming days over rising demand after EID holidays from major scrap importers like Turkey and Asian markets along with the considerable impact of Russian scrap exports ban. On the other hand, South Korean steelmakers have suspended bids for Japanese scrap as prices have gone above expectation levels now.
Hyundai and Dongkuk Steel suspend bids for Japanese scrap - South Korea’s leading EAF steelmakers Hyundai Steel and Dongkuk Steel heard to have suspended bids for all grade of Japanese scrap for another week. Even in the last week, these steelmakers remained away from bidding due to obon holidays in Japan. These steelmakers seem not interested to accept the price expectations from Japanese scrap suppliers which have moved up to JPY 36,000-37,000/MT (USD 325-334), FoB levels for H2 due to sharply rising domestic scrap prices in major regions like Kanto and Gulf in Japan.
Earlier to this, Hyundai has booked two cargoes for October deliveries at USD 349/MT, CFR levels comprising total 93,000 MT scrap from leading scrap supplier SIMS, USA. Also, Dongkuk Steel booked another US cargo for October delivery.
Japanese suppliers kept inquiring with South Korean scrap importers but they remained resisting high prices amid considerable inventories and available contracts.
“Steelmakers are purchasing US cargoes in order to stabilize supply-demand in the local market in South Korea for high demand season in October” shared company official.
On 22nd Jun’18, Hyundai Steel had presented bid for H2 at JPY 33,000/MT (USD 297) on FoB Japan basis since then it remained unchanged for almost two months’ period.
SeAH Steel books US cargo - South Korean another leading steelmaker SeAH Steel has recently contracted for US scrap after observing successive bulk scrap purchases by Hyundai and Dongkuk since last few weeks. SeAH Steel has booked USA bulk vessel the first time in last five years comprising 32,000 MT of Shredded scrap at USD 362/MT, CFR South Korea. According to reports, until now SeAH Steel kept purchasing only Japanese scrap however, the company has concluded this contract with increasing requirement of high grade scrap and expensive Japanese scrap offers at present as compared to USA with delivery is scheduled by end October.
Price gap between USA and Japanese Shredded scrap widened further – Japan’s leading EAF steelmaker Tokyo Steel fetches Shredded at Utsunomiya factory at JPY 38,000-38,500/MT (USD 343-348) in Japan. The converted price for the same in South Korea climbs above USD 365/MT levels while US bulk Shredded have booked at levels similar or below than these price levels from Japan. Thus, most of the steelmakers are shifting to higher quality US scrap as compared to Japanese scrap.
Japanese supply of high grade scrap like Shindachi Daichibara (SB) has tightened in local markets on increased restocking activates. With rising operation hours at lower electricity prices, local scrap prices are driving high now in Japan. Although Japanese scrap prices are higher as compared to global scrap prices, it is really hard for Japanese sellers to lower their prices amid low generation rates.
- Inputs from Steel Daily
