Hyundai Steel’s Heavy Buying could Lift Japan Scrap Market

Hyundai Steel of South Korea purchased around 200,000 tonnes of ferrous scrap from Japan at weekly tender on Wednesday. Japanese exporters ship scrap by February 10. Hyundai Steel plans to increase scrap import by 200,000-300,000 tonnes per year to increase steel output by 800,000 tonnes after resumption of no.2 electric furnace at A area of Dangjin plant. The higher scrap demand could impact on Japanese domestic market though Japanese scrap export was slow due to the higher domestic price.Hyundai Steel offered FOB 32,800 yen per tonne for Japanese H2 grade scrap, which was 1,500 yen higher than previous offer. The price is almost same level as purchase price by Tokyo Steel Manufacturing’s Okayama plant. A Japanese trading firm source said the shipping for Hyundai Steel by early February could support Japanese scrap market. Japanese scrap market price is less higher than other market when US no.1 heavy melting scrap price is more than C&F US$ 300 per tonne. Electric furnace steel makers around Tokyo try to secure the requirement at 31,000-32,000 yen per tonne for H2 grade. They keep the price level after increase by mid-December. The market expected the local supply could get easier when Godo Steel’s Funabashi plant stops the operation for one and half months from January. However, Hyundai Steel’s aggressive move changed the mood. Local steel makers could be forced to compete with the export price unless the big export cargo could reduce the supply to local makers.