Winter restocking boosts South Korean scrap imports

South Korean imports of ferrous scrap rose in September as steelmakers started winter restocking in expectation that imported and domestic scrap availability will fall in the coming months.

Scrap imports to the country increased by 12.6pc on the month to 320,037t, but were down by around a quarter on the year, customs data show. Imports in January-September totalled 3.32mn t, down by 33.6pc year on year.

Mills began to lower scrap imports when the Covid-19 pandemic started as domestic long steel demand was significantly impacted. They subsequently cut operations and shifted procurement focus to domestic scrap. Supply in the domestic market was sufficient to cover a larger portion of mills' requirement in late-March-July, leaving mills with little appetite for imported scrap. But scrap flow started to fall as mills began to drop domestic collection prices in June-July, which consequently drove mills back to the seaborne market for imported scrap in late July.

South Korean scrap imports from Japan rose by 56.4pc on the month to 247,000t in September, but were down by 15.5pc on the year. South Korean steelmakers were eager for imported scrap in mid-July-August and Japanese scrap was their preferred option because of the shorter delivery time and higher availability at workable prices. Mills' demand for prime and cut grades scrap was higher than demand for obsolete scrap at the time.

US shipments fell significantly by almost 80pc on the month and by 85.5pc on the year to just 9,800t. This was because South Korean mills had little interest for US scrap in bulk cargoes after suppliers moved offers up in mid-late July.

Scrap imports from Russia fell by 30.1pc on the month to 41,065t, but increased by 18.6pc on the year. Mills' demand for Russian scrap was consistent as prices were competitive against US scrap. Russian suppliers will be likely to increase volumes available to South Korean mills in order to maximise sales before domestic scrap supplies begin to drop because of winter conditions.

Imports from Australia and other origins totalled 22,000t in September.

South Korean mills will attempt to raise imported scrap volumes further in the final quarter of the year, as stockbuilding for winter operations continues. Mills have been actively seeking scrap from Japan, the US and Russia in the past few weeks.

Terry Chuay