South Korea: Steelmakers' scrap inventories decline further, raising market instability concerns
...
Scrap inventories at 11 major South Korean steelmakers declined for the second consecutive week to around 1.01 mnt, down by about 12,000 t over two weeks. The drop was mainly driven by higher consumption and reduced inflows, with some mills falling below optimal inventory levels, raising concerns of potential market instability.
Region-wise inventory levels
Incheon region: Inventories increased to 216,000 t (+3.8% w-o-w), supported by higher stock at Hyundai Steel's Incheon plant amid maintenance and increased consumption.
Central region: Stocks declined to 335,000 t (-0.9% w-o-w), as reductions at Hyundai Steel outweighed slight increases at SeAH Besteel and Hwanyoung Steel.
Pohang region: Inventories fell sharply to 201,000 t (-4.3% w-o-w), driven by strong consumption due to high operating rates at Hyundai Steel and Dongkuk Steel.
Busan & Gyeongnam region: Stocks dropped to 131,000 t (-5.8% w-o-w), reflecting continued drawdown amid steady consumption.
Inventories of plate and special steel producers increased by 1.8% to 331,000 t, while bar and shape steel inventories declined by 2.4% to 678,000 t, led by lower stock levels at major mills including Hyundai Steel.
Company-wise trends
Inventory trends remained uneven across mills, with some reporting increases of over 10%, while others saw sharp declines of 11-13%. Large steelmakers largely maintained stable levels, whereas mid-sized mills experienced significant fluctuations. The decline is partly attributed to higher consumption, but also to reduced inflows as suppliers resisted lower price levels during negotiations.
The widening gap in inventory levels across mills is emerging as a potential source of market instability. Mills with lower inventories may adopt premium procurement strategies, including contracts or spot purchases, to secure volumes in the near term.
Note: This article has been written in accordance with a content exchange agreement between SteelDaily and BigMint.
