South Korea: Scrap stocks at domestic mills rise significantly

Major South Korean steel mills have exceeded the limit of their scrap warehousing volumes, as per a latest SteelDaily report.

Steel scrap stocks with major steelmakers have reached a high level. In particular, POSCO has a significant amount of stock at its warehouses. Its Gwangyang Works has stored scrap at 200 units i.e. around 5,000 tonnes (t) per day, this week, increasing by 67% than usual levels of 100 to 120 units.

After a minor accident that took place at Hyundai Steel's Incheon plant, small and medium-sized scrap suppliers turned to POSCO, and other major steel mills to supply the material, according to retailers.

A distribution industry official said, "There was a minor light-weight compression accident at Hyundai Steel's Incheon plant. However, inspection standards at the plant continued to be maintained as before. But small and medium sized suppliers, who are concerned about inspections at the plant, seem to be either delaying delivery or supplying to other steelmakers."

SeAH Besteel, one of the major steel mills, has also witnessed an increase in its scrap stock volume, recovering to around 6,000 t per day.

Earlier, in the last week, SteelMint had reported that Hyundai Steel, Dongkuk Steel and other producers have announced a hike in scrap purchase prices by KRW 15,000/t ($13/t), as per SteelDaily.

However, after the price hike, Hyundai's Incheon plant procured 8,000 t of scrap per day and its Dangjin works procured 9,000 t per day. Scrap delivery to Dongkuk Steel's Incheon Steel Works stood at more than 6,000 t per day and that to Hwan Steel was around 3,000 t per day.

Outlook

It is too early to say whether the increase in stocks will lead to price cuts. Although consumption has increased and imports are low, it is expected that mills may prefer domestic scrap as the imported prices are less workable for the mills.