South Korea: Ferrous scrap inventory at major mills drop 2% w-o-w

This week, the ferrous scrap inventory from eight South Korean steel mills witnessed a decline of around 2% to 783,000 tonnes (t) in comparison with 799,000 t reported in the previous week. Steel scrap inventory has been decreasing for two consecutive weeks, with the decline in the southern region becoming particularly noticeable after the conclusion of the special purchase period.

Region-wise inventory

Central region: In the central region inventory levels of steel scrap were at around 400,000 t, a slight decrease of 0.7% compared to the last week. Specifically, Dongkuk Steel saw a decrease of 13.3%, and Hwanghan Steel decreased by 8.5%. In contrast, Hyundai Steel's Incheon plant maintained its inventory level, while its Dangjin plant experienced a 7.6% increase.

Despite a significant increase in non-operational days at the Pohang plant since mid-May, the company appears to be focusing on the operation of its Incheon and Dangjin plants.

Southern region: Inventory in the southern region, where volume has decreased since the end of the special purchase, showed a greater decline than that in the central region. Specifically, the southern region saw a 3.2% decrease compared to the previous week, dropping to 383,000 t.

By company, Hyundai Steel's Pohang Plant experienced a 10% decrease, and Korea Steel's inventory decreased by 12.2%. POSCO maintained its inventory level, while the combined inventory of Daehan Steel and YK Steel increased by 3.9%. These inventory changes are believed to be influenced by whether contract purchases were extended immediately after the special purchase ended.

Meanwhile, daily stock in the southern region is estimated to have recently fallen to about 7,000 t. Expectations for further price increases are low. However, there seems to be an immediate response to price adjustments made by steel manufacturers.

In particular, the financial strength of iron scrap suppliers has been greatly reduced due to the continuous price decline last year, leading to a strong tendency to minimise the inventory holding period as the prospects for improvement in the product market remains low.

Note: This article has been written in accordance with an article exchange agreement between SteelDaily and BigMint.