South Korea: Scrap inventory at steel mills drops marginally w-o-w

Scrap inventory of the eight steel manufacturers in South Korea witnessed a marginal drop w-o-w. This week's total inventory stood at 900,000 tonnes (t), down 1% against 908,000 t a week ago.

Region-wise inventory

Central region: Steel scrap inventory in the central region stands at 474,000 t, reflecting a decrease of 12,000 t, or 2.5%, compared to last week. Notably, inventories have declined at Hyundai Steel's Incheon Plant and Dongkuk Steel mill, while increasing slightly at Hwangwan Steel and Hyundai Steel's Dangjin Steel mill.

Steel manufacturers in the central region have attributed these inventory adjustments to their efforts to manage stock levels by implementing partial warehousing restrictions in response to overstocking concerns.

Southern region: In the southern region, steelmakers held an inventory of 426,000 t, marking a 1% increase of 4,000 t compared to last week. While most steel manufacturers in the region reported declining inventory levels, Hyundai Steel's Pohang Works recorded an 8% increase, driving the overall rise in inventory for the region. On the other hand, POSCO, which had seen continuous inventory growth over the past three weeks, has now halted this trend, with its inventory decreasing by 1.8% compared to last week.

Mills to realign inventory levels

Since suppliers are not expecting any uptrend in prices along with ongoing growth in distribution volumes, steel manufacturers decided to align their inventory management strategies. They are prioritising short-term special purchases and implementing temporary stocking restrictions as their preferred methods for managing inventory levels rather than relying on price-related adjustments.

An official from a steel manufacturing company said, "The current inventory level is sufficiently high," and "we are in a situation where we have begun to control the inventory level by restricting stock at each factory."

Another contributing factor to steelmakers' inventory adjustments is the planned unloading of large mother ships towards the end of September. Dongkuk Steel and POSCO are set to commence unloading approximately of 30,000 t of imported scrap from large mother ships at Incheon and Gwangyang, respectively, during this week.

In the case of Korea Special Lectures, the special purchase period was extended this week, following a similar extension last week, resulting in a continued increase in stock levels. Although there were earlier predictions of production recovery as inventory increased, steelmakers have chosen to maintain the production cuts that have been in effect since July.

Despite the rising distribution volume, it appears that without a corresponding increase in production, more inventory may accumulate among borrowers. A representative from one supplier commented, "Some steel companies seem to be accumulating inventory in anticipation of a potential decrease in inventory levels during the extended holiday period following the end of September."

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