South Korea: Scrap inventory at major mills drops 3% w-o-w

The iron scrap inventory of the eight leading South Korean steel mills in the first week of March stood at 811,000 tonnes (t). This marks a 2.5% decrease from the previous week's inventory of 832,000 t as reported earlier. The steel scrap inventory has recorded its first decrease in seven weeks since late January. This decline is attributed to the persistent high levels of rebar inventory, which remained near 400,000 t, coupled with subdued demand.

The decline in steel scrap inventory varied across the country, with the southern region experiencing a sharper decrease compared to the central region.

Region-wise inventory

Central region: In the central region, inventory decreased by 0.6% to 429,000 t compared to the previous week. Dongkuk Steel, currently undergoing significant repairs, saw a 3.4% increase in inventory. Hyundai Steel's Incheon plant maintained stable inventory levels, while its Dangjin plant witnessed a 3.8% decrease. Welcome Steel, which recently implemented inventory controls, recorded a 3.7% decrease.

Southern region: In the southern region, inventory dropped by 4.5% to 382,000 t. The combined inventory of Deahan Steel and YK Steel remained unchanged from the previous week, while Korea Steel also maintained stable inventory levels. However, POSCO saw a 4.3% decrease in inventory, and Hyundai Steel's Pohang plant experienced a significant 10% decrease.

The decline in iron scrap inventory during the peak season is attributed to the recent excessive increase in rebar inventory. As per market sources, rebar steel manufacturers held an estimated 387,000 t of inventory as of early March. When considering the volume accumulated at rebar processing plants, this figure is expected to approach 400,000 t.

The substantial inventory level is notable, especially given the decline in new orders since the previous year and a significant reduction in demand for rebar. Specifically, the March production plan for rebar steel manufacturers is set at 637,000 t, a marked decrease compared to the average production plan between 2020 and 2023, which averaged 792,000 t annually. Consequently, the decrease in iron scrap usage is also expected compared to the average yearly consumption.

Scrap arrivals

Steelmakers' iron scrap imports have sharply declined, with major scrap docks nationwide showing a total volume of 37,171 t on 4 March, down by 25,000 t from the 26 February. Hyundai Steel's imports dropped from 49,221 t to 22,158 t, particularly in wiring for its Incheon plant falling from nearly 20,000 t to 5,500 t. Repairs on the Incheon plant's electric furnace led to decreased consumption, diverting imports to Dangjin, which saw a significant increase to 12,953 t from a previous low. Dongkuk Steel's production also decreased to 6,000 t as its Incheon Steel Works undergoes repairs, limiting domestic scrap purchases.

SeAH Besteel and Daehan Steel reported imports of 4,913 t and 2,000 t, respectively. In the southern region, including Hyundai Steel's Pohang plant, steel scrap arrivals totalled just 7,800 t. Despite expected consumption increases in March, imports have significantly dropped, posing concerns about supply and demand dynamics. Notably, imports by grade include 15,013 t of scrap, 7,507 t of HS, 7,604 t of H2, and 5,000 t of shredded.

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