South Korea Increases Radiation Checks on Japanese Scrap amid Trade Tension
In a recent policy transition observed in ferrous scrap industry, the South Korean customs service department has increased their inspections on imported ferrous scrap from Japan, the largest scrap supplier to the country.
Reportedly, the customs authorities are individually checking every scrap carrying vessel from Japan for radiation tests, unlike earlier when only random checks used to be conducted on scrap carrying vessels.
The direct impact of the same is likely to be reflected in the freight costs, thereby increasing the CFR price of Japanese ferrous scrap to South Korea. The said changes in inspection policy come in the aftermath of the Japan removing South Korea from customs white-list. The major ports observing an increase in inspection activity include Dangjin, Gwangyang, Busan, and Masan ports in South Korea.
With the recent increase in economic and political strains between the 2 countries, in addition to the port congestion at South Korean ports, it is expected that demand of Japanese scrap from Korea will reduce in the coming days, while an increase of bulk vessel bookings from other major sources of scrap like USA and Russia is being anticipated.
Recently, Japanese scrap exporters had increased the offers for South Korean buyers to around JPY 28,000-29,000/MT following an uptrend observed in the domestic scrap market after a gap of over 3 months. However, South Korea’s largest EAF steelmaker Hyundai Steel has not bid for Japanese scrap in over a month, since it had last revised its purchase price on 5th July’19 to JPY 27,000/MT, while the market is carefully observing the standoff between the countries.
South Korea’s ferrous scrap imports decreased by 10% Q-o-Q in Q2’19 as the country imported 1.66 MnT in the quarter as against 1.85 MnT in Q1’19. Notably, Japan’s share in total imports by South Korea dropped from 63% in Q1’19 to 59% in Q2’19, while Russia’s share increased from 9% in Q1’19 to 13% in Q2’19.
~Inputs from Steel Dailya
source: SteelMint
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