Domestic scrap prices in South Korea rose over the week to May 13 amid low inventory levels and intensified competition for local scrap, according to South Korea-based trader and mill sources.

The price of H2-equivalent Light A grade scrap in South Korea rose week over week to Won 425,000-460,000/metric ton ($285-$309/mt) on May 13. Heavy A prices similarly climbed week over week to Won 475,000-500,000/mt ($319-$336/mt) on the same day.

Platts, part of S&P Global Energy, assessed H2 ferrous scrap at Yen 54,000/mt ($342/mt) FOB Tokyo Bay on May 13, down Yen 400/mt week over week.

A South Korea-based mill source said the recent price increases were primarily driven by a shortage of scrap inventory at steel mills, stemming from limited scrap generation.

“Due to the recent strength in global scrap prices, steel mills have been increasingly focusing on domestic scrap procurement.

However, domestic scrap generation remains limited, causing supply tightness and declining inventory levels,” said the mill source. “As a result, mills have been raising purchase prices to secure sufficient inventory, leading to continued competition in procurement.”

According to the same mill source, steel margins were heard to be under pressure amid rising domestic scrap prices.

Some local mills in South Korea have kept their domestic scrap prices unchanged despite major mills raising their prices recently, said an Indonesia-based mill source.

“They cannot afford to increase the price for making rebar,” the mill source added.

A local trader said some steel mills may potentially face the risk of temporary shutdowns due to insufficient scrap intake, though further monitoring would be required as no confirmed shutdowns have been reported.

“While mills have the option to raise purchase prices, many are reluctant to do so aggressively, since they are already in deficit,” said the trader.