ASIA STEEL SCRAP DIGEST: South Korea priced out of deep-sea market amid Vietnam, Bangladesh deals

Steelmakers in South Korea have been priced out of the deep-sea scrap market following deals by mills in Vietnam and Bangladesh over the past week, sources told Fastmarkets on Friday September 17.

  • South Korean mills focus on domestic scrap market
  • Japan’s Tokyo Steel raises scrap buying price for second time in three days
  • China placing more cities under pollution-control measures

South Korea
Mills in South Korea have opted to stay away from imports of deep sea, United States-origin scrap and have left the stage to Vietnamese steelmakers to negotiate for the cargoes, sources told Fastmarkets.

A Vietnamese induction furnace-based steelmaker purchased a 20,000-tonne bulk HMS 1&2 (80:20) cargo from the US West Coast at $505 per tonne cfr on Monday, while negotiations were ongoing for further US cargoes at the higher prices towards the end of the week, heard at $510-515 per tonne cfr on Friday, sources in Vietnam said.

Deals were done last week at $530 per tonne cfr Bangladesh for deep-sea shredded scrap from the US and at $515 per tonne cfr for HMS 1&2 (80:20) from Australia and New Zealand, sources said.

“US deep-sea scrap suppliers don’t want to sell anything below $500 per tonne cfr South Korea for HMS 1&2 (80:20) today, so we are focusing on domestic scrap instead,” a South Korean steelmaker source told Fastmarkets.

“I don’t think Korean mills would be interested in deep-sea cargoes now, although they might consider buying one if they wanted to try and cool down the Japanese market,” a Japanese supplier said.

Fastmarkets’ weekly price assessment for steel scrap, HMS 1&2 (80:20), deep-sea origin, import, cfr South Korea was $490-500 per tonne on Friday, up from $475-480 per tonne cfr one week before.

Japan
South Korean steelmakers may still also obtain lower-quality H2 material at low prices from the Japanese market despite price increases by major electric-arc furnace (EAF) steelmaker Tokyo Steel on Friday, sources said.

Tokyo Steel will raise its purchase prices for steel scrap by another ¥1,000 ($9.13) per tonne at four of its steelworks from Saturday September 18, it said on Friday. This follows a rise of ¥500-1,000 per tonne at three of its steel works from Wednesday.

“Although the domestic Japanese market went up, some suppliers are still able to sell cheaper into South Korea,” a Japanese trading source said.

Sources said that workable prices for H2 would be ¥45,000-46,000 per tonne fob for Korean mills on Friday, with average freight costs of ¥4,500-5,000 per tonne to Korea from Japan.

The supplier source agreed, adding that “there is no need for Korea to pay higher for low-quality scrap.”

China
Interest in imported scrap remained poor in China amid news that more cities will be subject to pollution-control measures in the coming months. The period of production restrictions has also been lengthened by another four weeks.

“The restrictions on ‘two-high’ projects (high energy consumption and high emissions) caused lower steel production at mills, so demand for steel scrap and prices [both] decreased over the week,” an industry analyst said.
  
Market sources also regard the recent sharp falls in iron ore prices as bearish signals and expect finished steel prices to track the raw materials downtrend in the near term.

Major steelmakers lowered their scrap purchase prices by 70-80 yuan ($11-12) per tonne this week.

“The downward trend in iron ore prices has further dampened scrap steel prices, and the ratio of scrap used in blast furnaces and converters also decreased following the crude steel production cuts,” a mill source from Tangshan said.

Bids remained at $520-530 per tonne cfr northern China, with no interest in purchasing at higher levels.

Sellers handling Japanese HS scrap also their kept offers flat at $580-590 per tonne cfr China, with no incentive to lower prices, given the more-lucrative domestic market in Japan.
 
Fastmarkets’ calculation of the steel scrap, index, heavy recycled steel materials, cfr north China was $530 per tonne on Thursday, falling by $1.25 per tonne from Thursday.

Its calculation of the steel scrap, index, heavy recycled steel materials, cfr east China was $520 per tonne on Thursday, a decrease of $1.25 per tonne from Wednesday.

Fastmarkets’ assessment for steel scrap heavy scrap domestic, delivered mill China was at 3,670-3,710 yuan per tonne on September 17, down by 80 yuan per tonne from a week earlier.     

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