South Korean steelmaker Posco Steel has extended the date for the resumption of third blast furnaces in Gwangyang amid a slump in global finished steel demand caused by the COVID-19 pandemic. Steel demand from automakers, construction companies and shipbuilders has taken a hit due to the economic impact of the pandemic.
Posco had shut the blast furnace for the repair and maintenance work in early April and planned to resume operations in late May, according to local media. Posco’s eight other blast furnaces are operational. The company has five blast furnaces in Gwangyang and four blast furnaces in Pohang. The company’s management is yet to update on a decision to restart the furnace.
With the reduction of output caused by the idling, Posco’s flats production is estimated to decline to 375,000mt in June. Declined production, thus, likely to continue even in the coming days.
Demand for scrap cools off
Production cuts by mills have reduced the demand for both imports and domestic ferrous scrap in South Korea.Hyundai Steel revised its bids for Japanese higher-grade scrap (HS scrap equivalent to P&S, shindachi and shindachi press) to JPY25,000/mt ($233/mt) fob Japan on July 3, last Friday amid high scrap inventories. The mill skipped bidding for Japanese medium and low-grade scrap like #2 HMS, shredded and mix H1:H2.
Domestic ferrous scrap prices continued to drop for the third successive week by KRW10,000-15,000/mt as scrap supplies eased. In the bulk market, South Korean mills lowered their bids for Japanese #2 HMS by JPY5000-6000/mt through June to JPY21,500-22,000/mt fob Japan.