South Korea's ferrous scrap imports decline by 34% in CY'20

South Korea's scrap import volumes stood at 4.11 mn t in CY'20, down by 34% against 6.24 mn t in CY'19. Notably, scrap imports have dropped to ten years low since the data maintained with SteelMint from CY'10. Japan was the largest supplier with a volume of 2.83 mn t in CY'20 with a share 69% in the total scrap imported to South Korea. Imports from Japan have come down by 27% on y-o-y basis. It was followed by Russia and USA at 0.06 mn t and 0.05 mn t respectively in CY'20.

Reasons for decrease in scrap imports in CY'20 -

• South Korea's largest steel giant's production declines - South Korean steel giant and key scrap importer- Hyundai Steel reported Q3 crude steel output at 4.53 mn t, down 3.4% q-o-q compared to 4.69 mn t in the previous quarter CY'20. On a y-o-y basis, production fell by 12% against 5.15 mn t in Q3 CY'19. Company's steel production through EAF decreased due to mini-mill shutdown and demand contraction by bad weather. This in turn kept demand for scrap on the lower side. South Korea's crude steel output fell by 7% y-o-y to 60.8 mn t during Jan-Nov'20
  
  
• Weak domestic finished steel demand - Steel and scrap demand was limited due to a sluggish economy. This prompted Korean mills to reduce production and drop imported scrap procurement
  
  
• High Japanese scrap prices drop imports in CY'20 - Imported scrap prices were too high and were not supported by the economic realities in South Korea. COVID related issues also led to a drop in imports. They instead focused on domestic scrap purchase to satisfy their requirement
  
  

Outlook - South Korean buyers remain cautious on imported scrap bookings. Fresh slots for Jan-Feb'21 shipment and China's import policy will turn Japanese scrap traders active in the near term.