South Korea: Scrap inventory at major mills rises for second consecutive week

The scrap inventories of major South Korean steelmakers have increased by 3% to 890,000 tonnes (t) this week from 868,000 t as assessed on 29 August 2023. This marks the second consecutive increase w-o-w.

Although the rise in inventory might not appear substantial, it is crucial to take into account that this period typically sees inventory levels decrease and prices go up. Last year, the operating ratio for inventories among eight steel companies was 40.6%, and for the three rebar steel companies in the Busan-Gyeongnam region, it stood at 146%. This means that there is now more than twice the amount of inventory compared to the same time last year. Even if demand experiences a substantial improvement, the accumulation of inventory has reached a level where it becomes challenging to exhaust it all at once, resulting in a market dominated by buyers.

In the meantime, the stock levels remained stable. Steel producers in the Busan-Gyeongnam area are steadily building up their inventory, with an average daily recovery of 10,000 t of goods. Additionally, certain steel companies are implementing stock restrictions based on product grades.

Regional inventory status

Southern region: Southern region's scrap inventory jumped 4% w-o-w.

• POSCO's inventory grew sharply by 8% w-o-w, leading to an overall growth in inventory in the Southern region.
  
  
• Korea Iron and Steel, YK Steel, and Deahan Steel's inventory rose in the range of 2% to 5% over the week.
  
  
• Hyundai Steel's Pohang plant has the same inventory as the previous week.
  
  

Central region: In the central region of Korea, steelmakers held about 491,000 t of scrap inventory - higher by over 2% or 8,000 t in comparison with the week gone by.

• Hyundai Steel's scrap inventories at Incheon and Dangjin ports are similar to Jeonju
  
  
• Hwan Steel and Dongkuk Steel reported 5% and 9% scrap inventory growth, respectively w-o-w.
  
  

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