South Korea: Hyundai Steel changes its scrap purchasing strategy

South Korea's steel major, Hyundai Steel is reportedly heard to be adopting a new strategy for the scrap procurement in CY'22. The steel mill urged to take the ratio of 80:20 for domestic and imported scrap to avoid the abstract imports, as per SteelDaily reports.

Including Hyundai Steel, most of the mills anticipated that scrap prices may rise in the near term due to the fluctuations in Japanese currency (JPY) against dollar.

Below are the key changes in the steel mill's new scrap purchase pattern:

• 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. In particular, the participants see, there is no reason to make deals individually as rebar prices are very closely related to scrap prices.
  
  
• The company earlier used to sign bulk scrap import contracts to defend the short-term price hike in the imported market. As a result, the mill did not sign any new contract further for two-three weeks. However, this year, the deal volumes will not be adjusted in accordance with the market forecasts and offers, and a decent amount of imported scrap contracts would continue to occur.
  
  

The change in procurement pattern is taken into consideration to enhance the 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.

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