South Korea: Scrap inventory at major mills down by over 3% w-o-w

This week, the collective steel scrap inventory across eight South Korean steel companies stood at 946,000 tonnes (t). In comparison to the previous week, this reflected a reduction of 33,000 t, equating to approximately 3.5%. Both the central and southern regions experienced decreases, except for POSCO, where the inventory actually increased. Notably, this marked the third consecutive weekly decline.

Region-wise inventory

Central region: In the central region, steelmakers' inventory totalled to 514,000 t, reflecting a decrease of approximately 3.9% compared to the previous week. Across all steel companies situated in this region, there has been a gradual decline in inventories. Dongkuk Steel experienced a 7% decrease, while Hyundai Steel and Hwan Steel saw reductions of around 2% and 3%, respectively. Both suppliers' stockpiling and shipments have witnessed decreases, though the impact on steelmakers' warehousing is relatively modest. Consequently, the overall volume of scrap distribution to and from the metropolitan area is entering the year-end at a subdued level. Conversely, there are reports of some companies marginally increasing supply to secure sales. It is worth noting that this uptick in supply appears to be unrelated to the prevailing market situation and is possibly linked to special circumstances.

Southern region: In the southern region, the aggregate inventory of steelmakers currently stood at 432,000 t, indicating a decrease of 12,000 t or 2.7% compared to the previous week. Notably, Daehan Steel and YK Steel experienced a substantial 22% reduction in combined inventory, while Korea Steel also recorded a decrease of approximately 10%. Despite the escalating decline in distribution volume in the southern region, POSCO stood out with a 6% increase in inventory compared to the previous week.

POSCO recently lifted month-long stock restrictions, only to reinstate them five days later. This rapid fluctuation in stock restrictions contributed to a swift accumulation of goods in stock during the brief period when restrictions were lifted. Additionally, the influx of imports from the previous week was incorporated into the inventory, resulting in a noteworthy upswing.

The southern region's steelmakers are witnessing a significant decline in inventory. The daily intake, which peaked at over 13,000 t in mid-November during the height of price declines, dwindled to around 7,000 t last week.

While the overall decline in distribution volume persists, a delicate equilibrium in supply and demand is being reached at a low point. The inventory trend indicates a gradual downward slope. Although the consensus in the market is that prices have bottomed out, given the simultaneous reduction in distribution volume and inventory, expressing optimism for a rebound remains challenging.

Presently, the total inventory of eight steel manufacturers exceeds this year's average by approximately 60,000 t. In comparison to the corresponding week last year, the current inventory level is markedly higher, standing at 22% above the figures from the same period. This represents a 10% increase from the 12% difference observed last week.

With the exception of the Korea Special Lecture, the three companies located in Busan and Gyeongnam exhibit an even more pronounced contrast, boasting a 76.3% increase from the previous year. Despite the ongoing reduction in inventory, the same-week ratio compared to the previous year is on the rise, underscoring a slower decline in inventory compared to previous years.

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