South Korea: Scrap inventory at major mills rise 6% w-o-w

The collective inventory of eight South Korean steel companies this week reached 1,013,000 tonnes (t), marking a substantial 6.28% increase from the previous week. This surge is attributed to successive price cuts, leading to a sharp rise in stock quantities.

Region-wise inventory

Central region: In the central region, steelmakers amassed a scrap inventory of 549,000 t, reflecting a moderate 2.62% increase from the previous week. This growth, however, pales in comparison to the southern region's steel companies. Hyundai Steel Incheon, Dangjin, and Dongkuk Steel have implemented robust stocking restrictions to regulate inventory levels.

While Hyundai Steel's Incheon facility experienced an 8% inventory increase, Dangjin's inventory remained unchanged from the previous week. Dongkuk Steel saw a minimal 0.7% increase in inventory, and Welcome Steel's inventory rose by 5.7% compared to the previous week.

Southern region: Steel manufacturers in the southern region witnessed a significant increase in inventory, totaling 464,000 t, a noteworthy 6.18% upswing from the previous week. The combined inventory of Daehan Steel and YK Steel experienced a remarkable 18.67% surge, while Korea Steel's inventory increased by 4.88% from the previous week.

POSCO's inventory has been rapidly increasing, rising by 5.95% from the previous week. Currently, POSCO's inventory has reached its highest point in the past decade, likely influenced by increased warehousing in response to neighboring steel manufacturers implementing warehousing restrictions before POSCO. On 13 November, POSCO initiated inventory controls due to excessive inventory.

In contrast, Korea Special Lectures reported a slight decrease in inventory compared to the previous week. This reduction is indicative of swift inventory control measures implemented as distribution volume in the southern market increased.

As steelmakers' inventories expanded in the last couple of weeks, the prevailing sentiment was that a further decline in prices was inevitable. Indeed, on 13 November, steel companies in the southern region announced a reduction in scrap purchase prices. It appears highly likely that steelmakers in the metropolitan area, known for controlling inventory holdings and implementing inventory control, will also implement additional price cuts in response to the changing market dynamics.

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