South Korea: Ferrous scrap imports drop nearly 50% in 9MCY'24

• Import arrivals impacted by Chuseok holiday
  
  
• Scheduled maintenance pushes down demand
  
  

South Korea's ferrous scrap imports totalled 1.48 million tonnes (mnt) in the first nine months of 2024 (9MCY'24), a significant 48% decrease compared to 2.83 mnt in 9MCY'23.

According to BigMint's data, imports increased by 20% to 0.177 mnt in September 2024 from 0.148 mnt in August 2024. However, imports saw a fall of 26% y-o-y from 0.238 mnt in September 2023.

In September, towards the second half, domestic ferrous scrap inventories dropped to their lowest level in two years, yet there were no signs of a shortage in the steel industry. This decline was primarily due to sluggish market conditions, notably among the worst in recent years.

Domestic steelmakers saw a significant decrease in their ferrous scrap inventory in the month following the Chuseok holiday (17 September), as they did not receive deliveries during the holiday and several factories underwent maintenance.

In 9MCY'24, the crude steel production of South Korea declined by around 5% y-o-y to 47-48 mnt as compared to January-September 2023 (50.4 mnt).

Country-wise breakup

Imports from Japan down: South Korean steel mills imported approximately 1.15 mnt of ferrous scrap from Japan in 9MCY'24, a significant decrease of 44% y-o-y compared to 2.07 mnt in 9MCY'23.

On an m-o-m basis, imports edged up by 3% to 129,794 tonnes (t) in September compared to 125,813 t in August. This volume accounts for 73% of the total volume imported in South Korea.

However, on a y-o-y basis, imports from Japan declined by 23% from 168,196 t recorded in September 2023.

In South Korea, demand for Japanese scrap was weak, despite falling prices for Japanese ferrous scrap. Although offers for Japanese H2 scrap became cheaper, buyers saw no cost advantage in importing it.

Market participants believe that further price drops are needed to make imports viable. Even though Japanese H2 prices are now lower than South Korea's domestic Light A scrap for the first time in 11 months, South Korean mills still prefer local scrap to imports.

Sourcing from the US declines: Ferrous scrap imports from the US to South Korea stood at 83,412 t in 9MCY'24, a decrease of 74% y-o-y compared to 320,212 t in 9MCY'23.

However, on an m-o-m basis, imports dropped by 14% to 5,025 t in September compared to 5,819 t in August. On a y-o-y basis, volumes saw a fall of 66%, a decrease from 14,601 t in September 2023.

Drop in scrap imports from Russia: Imports from Russia to South Korea dropped by 23% to 192,865 t in 9MCY'24 compared to 249,485 t in 9MCY'23.

However, m-o-m, imports increased tremendously by more than 200% to 35,918 t in September compared to 10,393 t in August. On a y-o-y basis, volumes saw a significant rise of 83% from 19,650 t in September 2023.

Outlook

In the near term, imported ferrous scrap demand is expected to remain subdued, with industry insiders noting that ramping up steel production quickly is challenging. Additionally, the current low scrap inventory levels are not causing any significant disruptions for the industry.