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Hyundai Steel Suspends Fleeting Again from February 20
= Unfavorable wind for the export market, which was in rebound phase =
Hyundai Steel in South Korea would stop fleeting of Japanese ferrous scrap temporarily, and suspend to accept the remaining contract balance from February 20. The company planned to accept 200,000 tons level of Japanese ferrous scrap this month. Recently, new fleeting was actually stopped, because the company could no longer accept ferrous scrap. Moreover, concerning the arrivals of ferrous scrap in March, it is expected that fleeting for the company would be likely to stop thoroughly.

The production quantity in February declined because of the maintenance schedule in February and Lunar New Year Holidays. As a result of that, the inventory in hand increased. That was the main reason for suspension of fleeting. In addition to that, it is expected that deepsea bulk cargoes would arrive at the ports from the end of February to March. The inventory, which was held by the company, seems to reach a high level of around 650,000 tons totally in 3 bases, such as Incheon, Dangjin, and Pohang, recently.

Recently, the new export market kept rebound trend, thanks to a resume of negotiation for Vietnam and Taiwan. The suspension of fleeting by Hyundai Steel would be likely to cool down that trend. When the company had suspended fleeting of Japanese ferrous scrap in last October, the domestic market declined drastically after that. There is a concern that the sense of uncertainty would intensify in the new export market.

As of February 7, the remaining contract balance of Japanese ferrous scrap, which was held by the company, reached a high level of 500,000 tons, including the scheduled purchase quantity from the joint yard, where the company held in each domestic area. If the completion of the existing contract balance stagnated, there is a possibility that it would affect the trend of domestic demand and supply balance toward the end of fiscal year.

Recently, the company made a bid on No.2 HMS basis at low price of Y 28,500/ton FOB, which was had a gap with the export price for Vietnam and Taiwan, which had exceeded Y 30,000 FOB. And the largest focal point for the market participants was whether the company would raise a bid or not after the Lunar New Year Holidays for forecasting the outlook of the new export market.

It cannot be expected that the company would raise a bid drastically to Japanese ferrous scrap in parallel with suspension of fleeting. Because totally 7 deepsea bulk cargoes or 270,000 tons level is scheduled to be delivered for 5 electric steelmakers in South Korea in March, there is a concern that the export market for South Korea would be forced to keep sluggish tone in the medium term.
last modified : Mon 18 Feb, 2019 [11:03]
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