South Korea-origin scrap has begun to draw some attention from buyers in East Asia, mainly Vietnam and Taiwan.
Along with the recent emergence of several bookings for China-origin scrap, South Korea-origin scrap is expected to be another addition to the market.
Some bookings by Seoul-based scrap exporter GMR Materials have been heard done recently.
Around May 24, Japan's leading mill Tokyo Steel concluded a booking for around 3,000 mt of Japanese H2-equivalent materials at $241/mt CFR Futajima, Japan, a source close to the company confirmed.
Earlier this week, GMR sold around 5,000 mt of H2 to Taiwan at $221/mt FOB South Korea and also around 5,000 mt of H1/2 50:50 to Thailand at $230/mt FOB South Korea, the source added.
S&P Global Platts had a chance to sit down with Danny Kim, CEO of GMR Materials, at the 2017 World Recycling Convention and Exhibition in Hong Kong on Tuesday.
"South Korean scrap is starting to get more credibility from buyers in terms of quality, and the number of inquiries is increasing," said Kim.
Currently, GMR Materials is exporting around 30,000 mt/month, equivalent to around 360,000 mt/year, of South Korea-origin scrap to mainly East Asian countries.
Of the total, around 20,000 mt/month is for export to Vietnam and the rest to Taiwan, Thailand, and Bangladesh, the CEO said.
It has been widely heard among trading sources in South Korea that domestic scrap suppliers find it difficult to export scrap because of their complicated business relationships with local steel mills.
GMR, after acquiring a local scrap supplier in 2016, began its scrap-exporting business by selling around 25,000 mt to Bangladesh. GMR is now the only scrap exporter from South Korea.
"The scrap market situation in South Korea now is following a very similar pattern to what was happening in the Japanese market around 10-15 years ago," the CEO explained.
"Japan's domestic scrap generation had suddenly increased exponentially around 10 years ago, and now Japan is one of the main scrap exporters globally," he added.
South Korean industry participants generally estimate the proportion of domestic scrap to around 70% of total scrap usage. However, the CEO claims that the proportion has now jumped up to around 80% or more.
"Given the current trend in domestic scrap generation, it will be inevitable for South Korean scrap suppliers to start actively exporting in about five years," he told Platts.
South Korea was the fifth-largest in using scrap in steel production, after China, EU-28, the US, and Japan, in 2016, according to data provided by the Bureau of International Recycling.
In 2016, South Korea consumed a total of 27.4 million mt of scrap, down 8.2% year on year, to produce a total of 68.57 million mt of crude steel, also down by 1.6% year on year.
