South Korea: Ferrous scrap inventory decline amid falling prices and production slowdown

• Central region saw a notable reduction in scrap iron inventory
  
  
• Inventory decline driven by price cuts, resulting in lower steel scrap stocks
  
  

SteelDaily: This week, the combined ferrous scrap inventory of eight major South Korean steel mills showed a downtrend, driven by continued price declines at large steel mills. Stocks dropped by 3.6%, or more than 30,000 t, reaching 804,000 t compared to the previous week.

Although both the southern and central regions saw a decline in stocks, the decrease was more significant in the central region, where larger steel mills are located.

Region-wise inventory

Central region: In the central region, scrap inventory dropped by 4.8% w-o-w, reaching 467,000 t.

In terms of companies, Hyundai Steel's Incheon and Hwanyoung plants saw w-o-w inventory decreases of 6.6% and 9.3%, respectively, while Dongkuk Steel's stocks dropped by 8% w-o-w.

Southern region: In the southern region, inventory levels stood at 337,000, down by 2.3% w-o-w. Hyundai Steel's Pohang plant experienced a 9% w-o-w drop in inventory levels, while POSCO's inventory increased by 3% w-o-w.

The combined inventories of Daehan Steel and YK Steel remained stable w-o-w, while Korea Iron and Steel's inventory fell by 6.9% compared to the previous week.

The reduction in inventory, especially at large steel mills in the central region, can be attributed to price cuts. When steel scrap prices fall, steel mills tend to reduce their purchases or usage of scrap, leading to a decrease in inventory levels. This is because lower prices often signal reduced demand or lower profitability for steel mills, prompting them to adjust their scrap stock accordingly.

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