South Korea: Ferrous scrap imports surge over 50% on rising domestic prices

South Korea, a leading ferrous scrap consumer, recorded 0.56 mnt of scrap imports in Mar'22 as against 0.37 mnt in Feb, a significant hike of 51% m-o-m, as per SteelMint data.

Ferrous scrap imports jumped on high procurement prices of domestic scrap in the retail market as well as tight availability.

The fall in shredded base material supply from cars, likewise, pushed up domestic scrap prices resulting in a sharp rise in March import shipments.

On a y-o-y basis, too, imports surged 93% from 0.29 mnt in the corresponding period last year. Notably, this hike was witnessed after a gap of seven months.

Country-wise share

• Imports from Japan: South Korea imported 0.33 mnt of Japanese bulk scrap in March, a hike of 10% as against 0.3 mnt in the previous month. Buyers came back stronger into the imported scrap market for restocking. However, there is bid-offer disparity in the market.
  
  
• Imports from the USA rebound: South Korea's scrap imports from the USA surged sharply in March to 0.10 mnt from 0.01 mnt a month back. As domestic scrap prices had increased, major mills booked bulk scrap cargoes at higher rates.
  
  

Also, mills had scheduled an overhaul in their operations and the demand for scrap increased for restocking with a few motherships arriving from the USA in March.

• Scrap purchases from Russia rise: Russian scrap imports increased by 25% m-o-m in March to 0.05 mnt in March as against 0.04 mnt in Feb. Considering the fall in Russian A3 scrap prices, mills raised bids and signed contracts to import scrap.
  
  

South Korea's steel major, Hyundai Steel is adopting a new strategy for scrap procurement in CY'22. The purchases would now take place through official tenders unlike the previous pattern where the mill used to individually negotiate with traders and secure scrap volumes without announcing prices in the market.

The change in procurement pattern is taken into consideration to enhance domestic purchases of scrap and the policies shifted towards aggressive pricing strategy that secured the required quantity even when paying at and above the competitor's level.