South Korea: Hyundai Steel Cuts Bid for Japanese Scrap by USD 5

As per recent reports, South Korean leading EAF steelmaker, Hyundai Steel has lowered open bids for Japanese scrap by another JPY 500/MT (USD 5) this week on account of further price cut by Tokyo Steel in the domestic scrap purchase and to balance supply-demand during Golden week holidays starting from today in Japan.

In bids presented today for Japanese scrap, the company has reduced H2 bids to JPY 31,000/MT (USD 278), FoB Japan against JPY 31,500/MT, FoB presented last week. This is a lower price cut as compared to JYP 1000/MT cut observed last week. Hyundai steel has now observed 4 consecutive price cuts in 4 weeks since it resumed bidding for Japanese scrap again from 27th Mar'19.

Hyundai steel is the largest buyer of Japanese scrap which imports around 2.5 MnT scrap every year comprising around 30% of total Japanese yearly scrap exports. Hyundai's bidding for Japanese scrap is considered to be the benchmark for East Asian scrap market.

Japanese scrap prices in Kanto hit 20 months low - Japan's leading steelmaker Tokyo Steel made 8th consecutive price cut in Apr'19 so far and reduced scrap purchase prices by JPY 500/MT at all plants effective from 24th Apr'19 in order to achieve inventory adjustment. Notably, H2 scrap price for Utsunomiya works has fallen to 20 months low and now stands at JPY 29,500/MT (USD 264).

It is being anticipated that rapid fall in scrap prices are showing signs of stopping amid ten days Golden week holidays starting from today, (26th April) to keep the production activities slow.

Lowered scrap prices to impact rebar prices in South Korea - Scrap buying prices are considered to be the major dynamic influencing rebar prices in South Korea. As per Steeldaily's report, sharp fall in scrap prices in the largest supplier market, Japan likely to result in a fall in domestic rebar prices in South Korea in May-Jun'19.

Japanese Yen has shown strengthening against South Korean Won (KRW) over the last 1 week time. JPY/KRW exchange rate stands at 10.40 against 10.15 a week ago. Domestic scrap demand rose slightly due to currency strengthening of Japanese Yen, however, in the Southern region prices continued downtrend on account of fire accident at KISCO.