South Korea: Scrap inventory at major mills rises w-o-w post-price cut announcement

This week, the combined inventory of eight South Korean steel producers reached 931,000 t, marking a notable increase of 79,000 t, equivalent to 9.3%, compared to the previous week. Inventory levels witnessed growth in both the central and southern regions, with the southern region experiencing a more pronounced increase, largely influenced by the substantial inventory buildup at POSCO.

Region-wise inventory

Central region: In the central region, the total inventory of steelmakers reached 501,000 t, marking a notable increase of 32,000 t, equivalent to 6.8%, within a week. All steel manufacturers reported increased inventories, with Hwang Steel registering the most significant percentage rise at 22%. Hyundai Zeche's Incheon factory also experienced a 18% increase in inventory, while Dongkuk Steel's inventory saw a 3.3% increase. Most steel manufacturers are actively managing and controlling their inventory levels.

Southern region: In the southern region, steelmakers' total inventory reached 430,000 t, marking a substantial increase of 47,000 t, equivalent to 12.3%, compared to the previous week. Notably, POSCO demonstrated rapid inventory growth, with a remarkable 16.7% increase within a week. Given that POSCO holds more inventory than other steel manufacturers, the absolute increase in their inventory is significantly larger. The combined inventory of Daehan Steel and YK Steel also grew by approximately 8.5%. In the Yeongnam region, fluctuations led to the accumulation of over 25% of their inventory in just one week.

Following a collective price reduction by steel manufacturers over the weekend and at the beginning of this week, inventory levels surged in the past few days, resulting in a significant weekly increase. The challenge lies in the fact that, despite this rapid inventory growth, production rates among steelmakers remained notably low. In particular, Daehan Steel and YK Steel are expected to further reduce factory operation rates in November compared to the previous month. Industry sources anticipate that Daehan-YK's factory may remain closed for more than 10 days in November, with the factory's operation rate barely surpassing 50%. Hyundai Steel and Dongkuk Steel are also maintaining strict inventory control measures due to their high inventory levels and low operating rates.

Despite the significant reduction in operational rates compared to previous years, inventory levels are over 12% higher than the previous year. Specifically, the three rebar steel companies in Busan and Gyeongnam have 164% more inventory than the same week last year. Given this inventory situation, a further price decline is anticipated. An industry person commented, "Due to the influx of stock ahead of the price reduction last week, it's essential to closely monitor the inventory trend starting from early this week when the price cut occurred. In fact, it's highly likely that there will be at least one more price reduction."

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