South Korean Steel Makers Starts Purchase of Japanese Ferrous Scrap

South Korean electric furnace steel makers including Hyundai Steel and Dongkuk Steel are moving to conclude import contracts for Japanese ferrous scrap when domestic ferrous scrap price is rising rapidly. They aim to brake steep upsurge of domestic ferrous scrap price by purchasing Japanese ferrous scrap. The electric furnaces are likely to approve as high as FOB 40,000 yen per tonne.

South Korean steel makers have recently decreased scrap import contracts. South Korean ferrous scrap import was below 120,000 tonnes in December 2010. Steel makers’ purchase price for domestic scrap has risen by more than 20,000 won per tonne this month. However, scrap supply maintains short. Steel makers hurry to import Japanese ferrous scrap and secure material stock for next month.

Import price of U.S. ferrous scrap has already reached US$ 500 per tonne. Japanese ferrous scrap supply is also expected to tighten due to heavy snow disaster. South Korean steels are likely to approve high price even at above 40,000 yen.

In Tokyo area of Japan, ferrous scrap market price is strong at around 30,500 yen per tonne for H2 grade, 32,300 yen per tonne for H1 and 34,000 yen for HS. Local electric furnaces paid 36,000-37,000 yen for H2 and some paid as high as 37,500 yen as of Wednesday. Newly contracted export price is around FOB 38,000 yen for H2, up by 3,500 yen from last week. Export price is approaching local market price.