South Korea: Hyundai Steel's scrap inventory level falls due to change in strategy

South Korea's largest scrap consumer and major steelmaker, Hyundai Steel, has reported a change in its scrap procurement strategy. The company's stock proportion of scrap was recorded at an all-time low due to this change in strategy.

According to the latest survey by SteelDaily, out of the eight major steel mills in South Korea, Hyundai Steel's share of inventory level in CY'20 touched 64%. In CY'21, the stock proportion fell by 7% to 57%. However, it is expected that it might decline further by 53% in the current year.

The stockpiling share of Hyundai Steel dropped so that it could increase domestic scrap usage due to increasing supply-demand uncertainties as well as a few strategic actions taken to reduce stock maintenance costs.

Imported scrap bookings

Last week, Hyundai Steel has signed a contract for US-origin scrap. The cargo contains 45,000 t of HMS 1 scrap, booked at a price of $625/t CFR. The material is expected to arrive in South Korea in May.

Also, the bids for H2 scrap are stable at JPY 66,000/t ($534/t), while those for Shindachi bara are at JPY 73,500/t ($594/t) FOB. Hyundai Steel has kept bid prices unchanged, to change the procurement pattern in order to enhance domestic purchase of scrap.

The policies have 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.