Ferrous Scrap Price to Rebound in December

Ferrous scrap market price in South Korea is expected to rebound when the price is 40,000-50,000 won per tonne lower than the price in Japan when Japanese largest electric furnace steel maker, Tokyo Steel Manufacturing increased the purchase price. Some market sources see some South Korean steel makers including Hyundai Steel reduce the purchase price. However, the price would not decrease due to tight scrap supply in southern part of South Korea. If the price decline, Japanese electric furnaces would import cheaper South Korean scrap.

Ferrous scrap market price in South Korea is decreasing when South Korean electric furnaces, which mainly produce concrete reinforcing bar, keep the production at low level since late September due to low demand. The production cut is as wide as 40%. The largest maker, Hyundai Steel can secure steady scrap supply from its group company, Hyundai Motor and Kia Motors and Hyundai Steel has more than 750,000 tonnes of scrap inventory due to large scrap import volume.

Hyundai Steel reduced the scrap purchase price by 5,000 won per tonne for new cutting scrap and by 10,000 won for other grade on November 1. POSCO reduced the scrap purchase price by 15,000 won on November 3 and other makers in southern part of South Korea followed price reduction on November 5. In addition, Hyundai Steel reduced new cutting and heavy grade scrap price by 10,000 won on Monday and plans to reduce the price by 10,000 won later the week.

While scrap purchase price reduction by Hyundai Steel, US west coast scrap price increased and scrap price in Japan is increasing due to price hike by Tokyo Steel Manufacturing. South Korea makers’ scrap purchase price is 50,000 won per tonne lower than Japanese makers. The price in South Korea would rebound in December when the price in southern part of South Korea seemed to bottom out.