South Korea: Hyundai continues booking lower volumes of Japanese scrap

South Korean steel major Hyundai Steel has started booking Japanese scrap at very low volumes since last week. It has been cautious about booking higher volumes on the expectation that prices may fall, going ahead.

It recently signed a contract for sourcing steel scrap with Japanese traders last week, as per SteelDaily reports. An industry official said, "Hyundai Steel has signed a contract for 10,000 tonnes (t) of Japanese steel scrap, which includes 5,000 t of H2 grade scrap."

As per reports, Japanese traders offered about 100,000 t of scrap last week, in which Hyundai Steel was able to procure 10% of the offering, ie, 10,000 t. The overall procurement quantity was lower owing to expectations of further price corrections.

On 2 Dec'21, the South Korean steel major trimmed bids for Japanese ferrous scrap by JPY 2,000-3,500/t ($18-31/t) for various grades compared to the last bid on 17 Nov'21. Bids are now at JPY 47,500 ($420/t) FOB Japan for H2 grade, lower by JPY 2,000/t.

For the time being, the company is not much active in scrap bookings as it is observing the global market trends which are highly volatile at present.

Disparity in Japanese domestic, export prices

Japan's Tokyo Steel kept its domestic scrap buying prices unchanged after the company adjusted its purchase prices twice in the third week of Nov'21. The steelmaker continued to pay a bid price of JPY 55,000/t ($486/t) delivered to the Tahara plant in central Japan and the Utsunomiya plant located in the Kanto region.

There are two factors behind the firm domestic market - one, the sluggish overseas market, and two, strong production from the electric furnaces.

However, it has been pointed out that the number of dismantling projects is increasing at present, and the amount of scrap generated is rising.

As per reports, Toyota Motor Corp, the world's top-selling automaker, said earlier this month that it will start making up for production losses incurred in the last seven months due to chip shortages in Dec'21 with its factories in Japan returning to normalcy.

Outlook
The South Korean mills are waiting for prices to come down before making any fresh bookings. Japanese scrap suppliers are not likely to further lower their export prices and are waiting for the monthly Kanto Tetsugen scrap export tender which has been scheduled for next week, trade sources informed SteelMint.