South Korean scrap imports rise on firm steel demand

South Korean ferrous scrap imports rose in June on firmer domestic and export demand for the country's finished steel products.

June ferrous scrap imports increased by 18pc from the previous year to 413,000t. January-June imports were down by 13pc from 2020 at 2.1mn t.

South Korean steel mills were buying scrap from the seaborne market for June delivery to serve firm domestic demand for their steel, particularly from the construction and shipbuilding sectors. Steel export markets also remained strong. Domestic scrap supplies were unable to serve South Korean steel producers' requirements.

Buyers matched sellers' prices for base grade scrap and were willing to pay higher for premium grades. Large volumes were transacted as buyers prioritised Japanese scrap because it has the shortest lead time.

For Japanese scrap arrival into South Korea in June, deals had to be done in May. Prices of Japanese scrap rose by ¥6,400/t for H2 and ¥5,800/t for HS from the end of April to ¥50,000/t and ¥56,000/t fob respectively by 14 May. A drop in Chinese domestic steel prices started to affect Asian scrap prices in the second half of May. Japanese scrap prices started to fall and by the end of the month were at ¥47,000/t fob for H2 and ¥53,000/t fob for HS.

South Korean ferrous scrap imports from the US rose in June as some buyers were anxious to get additional scrap volumes. But it was down from May as other mills avoided purchasing US scrap when prices were high.

South Korean demand for Russian scrap was strong but volumes offered were limited. The Russian government's decision to raise its export duty on ferrous scrap from 1 August is likely to limit South Korean imports of Russian scrap for the rest of the year.

South Korean imports for July and August are likely to increase based on firm buying activity by steel producers over the past month. Mills have significantly increased consumption and imports of premium grade scrap in blast furnaces with their decarbonisation targets.

By Terry Chuay