Hyundai Steel Buys Japan Ferrous Scrap

Hyundai Steel of South Korea purchased Japanese ferrous scrap at FOB 25,500-26,000 yen per tonne for H2 and around 28,000 yen for new cutting scrap in the week through trading company. The price is in line with transaction for East Asia market last week. The firm apparently purchased Japanese scrap when US scrap price turned into increase.

South Korean scrap import increased from bottom in December and January while South Korean scrap is exported to China. Chinese scrap import from South Korea increased to near 3 times at 128,180 tonnes in January-May from same period of 2008. South Korean steel makers try to reduce the domestic scrap price by importing from offshore market while Chinese purchase cancels part of the downward pressure.

Chinese scrap purchase leads Asian market price. Chinese buyers show appetite for Japanese scrap at CFR US$ 325 per tonne for HS and US$ 285 for H2 grade, which is US$ 5 lower than previous week. The price level without freight is in line with Hyundai Steel’ purchase price.

US scrap export price increased by US$ 15-16 to around US$ 290 per tonne for shredder and to around US$ 285 for heavy melting scrap with no.1 80% and no.2 20% mix for Turkey. US steel makers also restarted the scrap purchase. However, some industry interests expect the price increase by US$ 30 for heavy melting, by US$ 50 for shredder and by US$ 80 for new cutting grade under tight supply.

Japanese electric furnace steel makers increased the scrap purchase price by 3,000 yen to 24,500-26,000 yen per tonne for H2. The consumption is still 40-50% lower than a year earlier level. However, the supply is balanced under low level generation and integrated steel makers’ purchase. The domestic price is likely to be supported by the export price at FOB 25,500 yen level for East Asia.