Korea: U.S. Scrap Keeps Wheels of Industry Turning

Korea’s emergence as a major Asian consumer of U.S. scrap has astounded many. Scrap shippers have seen a leap in Korean buying during the past few years. As they continue their contribution to Korea’s industrial boom, U.S. scrap exporters wonder: How long will this go on?

U.S. exporters of ferrous and nonferrous scrap believe 1990 will be as good a consumption year--if not better--for material fueling Korea's economy. A copper scrap executive explains: "About 70 percent of Korea's copper and brass scrap comes from the United States. There's been a strong demand which hasn't been completely filled by U.S. exporters. Korea will definitely need more copper and brass scrap in 1990 than it took in 1989." Stainless scrap shippers anticipate a steady pattern of buying during 1990. Aluminum traders, noting "fair" shipments in 1989, say they expect a slight increase in tonnage shipped in 1990. Ferrous scrap exporters forecast that Korea will take about the same or a bit more iron and steel scrap in 1990 than in 1989.

The Korean economy is said to be doing well, although U.S. observers believe it is not growing as fast as it has in the recent past. Should the U.S. economy falter, one U.S. metals official says, it will affect Korean trading since that country also ships goods to the United States. Observers also see Korean labor rates rising (important labor negotiations took place for the metal industries in March) and a heavier financial burden on the Korean business community as a result of stricter environmental regulations.

Primary and Scrap Metal Import Partners

Korea imports much of its primary metal (including concentrates) and scrap. Most of the prime metal is purchased outside the United States. Reportedly, Korea secures aluminum from Australia, Japan (with whom it has partnership agreements), and the Middle East (though these purchases are said to be tapering off). A recently published report indicates that Lucky-Goldstar International, a major Korean copper company, signed a barter agreement with Iran to import about 3,000 tons of electrolytic copper in 1990. The copper is supposedly in exchange for polypropylene.

Korea also plans to import prime metal for stockpiling. Reports are that it will purchase aluminum from Romania, Australia, and the Soviet Union, and nickel from Finland, the United Kingdom, and China. While much of Korea's scrap is purchased from the United States, a portion comes from other countries--for example, it receives steel scrap from Australia, Japan, Vietnam, and Europe.

Copper and Brass Scrap Trade Strong

There are three major consumers of copper and brass scrap in Korea--Gold Star, Poongsan, and Daihan Electric Co.--in addition to several hundred medium-sized and small consumers. The large consumers primarily purchase No. 1 copper scrap; the medium-sized and smaller buyers take Berry, Candy, and Birch/Cliff. Approximately 90 percent of these purchases are made through U. S. brokers or through agents in Korea, say exporters, who add that there is pressing demand for quality clean, bright wire.

Existing tariff and duty regulations that once favored scrap over primary materials appear to have become considerably less biased. For example, while in past years the duty on copper cathodes was 20 percent and the duty on scrap 10 percent, currently it is reported to be 10 percent on cathodes and 3 percent on scrap. "Scrap is still cheaper to bring in," comments one shipper, "but it's not as favorable as before."

Most U.S. shippers believe Korean demand for copper and brass scrap will continue to show appreciable growth and that 1990 will be a good export year.

In 1988, U.S. exporters shipped 70,090 short tons of copper and brass scrap to Korea. In the first 11 months of 1989, approximately 63,000 tons were shipped.

Aluminum Scrap Sources

There are two major sheet nulls m Korea, but they use only prime metal, according to U.S. industry members. "It's unlike Japan," says one company official, "where they once used only primary aluminum but have since learned the economic advantage of using scrap." Most U.S. aluminum scrap goes to Korean smelters, which are small or medium-sized establishments absorbing moderate tonnages of metal.

Korea buys mainly Taint and Taint/Tabor, says an observer. "Its standards are as high as those of Japan--it is just as rigid and exacting in purchasing scrap."

U.S. shippers are said to be competing with Australia, the Middle East, and, to a lesser extent, Southeast Asia for the Korean aluminum scrap market. "Europe may become a competitor in 1992 when a united Europe comes into existence," says one exporter.

Looking ahead, a large shipper notes that January was a "fair" export month, adding that "the aluminum business has fallen off about 35 percent and exports probably also will be off slightly, although Korean demand appears to be holding."

In 1988, 18,677 short tons of aluminum scrap were shipped to Korea by U.S. exporters. In the first 11 months of 1989, about 13,000 tons were shipped.

Rapid Growth in Stainless Scrap Exports

Over the past few years, there has been a significant increase in Korean consumption of stainless steel scrap. This has been particularly marked since May 1989, when a major stainless mill went into operation and broadened the demand for scrap. U.S. shippers term Korea a bulk consumer of stainless scrap; since the mill has been in full operation, they say, there's been a steady pattern of buying. While some exporters anticipate a slight cutback in 1990, most believe the steady buying pace will continue and that 1990 business will not differ much from the tonnage purchased in 1989.

In 1988, Korea purchased 10,957 net tons of stainless steel scrap from the United States. In the first 11 months of 1989, more than 58,000 tons were shipped.

Active Steel Scrap Demand

There are reported to be six major steel mills in Korea purchase heavy tonnages of U.S. scrap. U.S. traders say Korea fulfills about 60 percent of its steel scrap needs from internal sources and imports the remainder. Of this imported material, about 70 to 80 percent is said to come from the United States. Published reports indicate that Korean steel output in 1989 reached more than 21 million tons, an astonishing doubling of output in less than a decade.

What kind of steel scrap moves to Korea? Shippers say the items generally in demand include No. 1 and No. 2 steel scrap, bundled scrap, some shredded scrap (for which Korea reportedly pays no premium), plate and structural scrap, and motor blocks.

"Korea today is what Japan used to be, " says a prominent shipper. He notes that, steel scrap exports to Korea in 1990 "are off to a running start" and that business was booked through April in some instances. But, he adds, it's tough to get sufficient transportation and it's tough to get UMB (unstripped motor block) in tonnages desired. The UMB business in the United States is said to be concentrated on the East Coast.

Western shippers indicate that there's a strong market in Korea for steel scrap and they anticipate moving about the same tonnage to Korea in 1990 as in 1989.

In 1988, 2.23 million net tons of iron and steel scrap were shipped to Korea from the United States. In the first 11 months of 1989, 2.35 million net tons were shipped.

Korea’s emergence as a major Asian consumer of U.S. scrap has astounded many. Scrap shippers have seen a leap in Korean buying during the past few years. As they continue their contribution to Korea’s industrial boom, U.S. scrap exporters wonder: How long will this go on?

U.S. exporters of ferrous and nonferrous scrap believe 1990 will be as good a consumption year--if not better--for material fueling Korea's economy. A copper scrap executive explains: "About 70 percent of Korea's copper and brass scrap comes from the United States. There's been a strong demand which hasn't been completely filled by U.S. exporters. Korea will definitely need more copper and brass scrap in 1990 than it took in 1989." Stainless scrap shippers anticipate a steady pattern of buying during 1990. Aluminum traders, noting "fair" shipments in 1989, say they expect a slight increase in tonnage shipped in 1990. Ferrous scrap exporters forecast that Korea will take about the same or a bit more iron and steel scrap in 1990 than in 1989.

The Korean economy is said to be doing well, although U.S. observers believe it is not growing as fast as it has in the recent past. Should the U.S. economy falter, one U.S. metals official says, it will affect Korean trading since that country also ships goods to the United States. Observers also see Korean labor rates rising (important labor negotiations took place for the metal industries in March) and a heavier financial burden on the Korean business community as a result of stricter environmental regulations.

Primary and Scrap Metal Import Partners

Korea imports much of its primary metal (including concentrates) and scrap. Most of the prime metal is purchased outside the United States. Reportedly, Korea secures aluminum from Australia, Japan (with whom it has partnership agreements), and the Middle East (though these purchases are said to be tapering off). A recently published report indicates that Lucky-Goldstar International, a major Korean copper company, signed a barter agreement with Iran to import about 3,000 tons of electrolytic copper in 1990. The copper is supposedly in exchange for polypropylene.

Korea also plans to import prime metal for stockpiling. Reports are that it will purchase aluminum from Romania, Australia, and the Soviet Union, and nickel from Finland, the United Kingdom, and China. While much of Korea's scrap is purchased from the United States, a portion comes from other countries--for example, it receives steel scrap from Australia, Japan, Vietnam, and Europe.

Copper and Brass Scrap Trade Strong

There are three major consumers of copper and brass scrap in Korea--Gold Star, Poongsan, and Daihan Electric Co.--in addition to several hundred medium-sized and small consumers. The large consumers primarily purchase No. 1 copper scrap; the medium-sized and smaller buyers take Berry, Candy, and Birch/Cliff. Approximately 90 percent of these purchases are made through U. S. brokers or through agents in Korea, say exporters, who add that there is pressing demand for quality clean, bright wire.

Existing tariff and duty regulations that once favored scrap over primary materials appear to have become considerably less biased. For example, while in past years the duty on copper cathodes was 20 percent and the duty on scrap 10 percent, currently it is reported to be 10 percent on cathodes and 3 percent on scrap. "Scrap is still cheaper to bring in," comments one shipper, "but it's not as favorable as before."

Most U.S. shippers believe Korean demand for copper and brass scrap will continue to show appreciable growth and that 1990 will be a good export year.

In 1988, U.S. exporters shipped 70,090 short tons of copper and brass scrap to Korea. In the first 11 months of 1989, approximately 63,000 tons were shipped.

Aluminum Scrap Sources

There are two major sheet nulls m Korea, but they use only prime metal, according to U.S. industry members. "It's unlike Japan," says one company official, "where they once used only primary aluminum but have since learned the economic advantage of using scrap." Most U.S. aluminum scrap goes to Korean smelters, which are small or medium-sized establishments absorbing moderate tonnages of metal.

Korea buys mainly Taint and Taint/Tabor, says an observer. "Its standards are as high as those of Japan--it is just as rigid and exacting in purchasing scrap."

U.S. shippers are said to be competing with Australia, the Middle East, and, to a lesser extent, Southeast Asia for the Korean aluminum scrap market. "Europe may become a competitor in 1992 when a united Europe comes into existence," says one exporter.

Looking ahead, a large shipper notes that January was a "fair" export month, adding that "the aluminum business has fallen off about 35 percent and exports probably also will be off slightly, although Korean demand appears to be holding."

In 1988, 18,677 short tons of aluminum scrap were shipped to Korea by U.S. exporters. In the first 11 months of 1989, about 13,000 tons were shipped.

Rapid Growth in Stainless Scrap Exports

Over the past few years, there has been a significant increase in Korean consumption of stainless steel scrap. This has been particularly marked since May 1989, when a major stainless mill went into operation and broadened the demand for scrap. U.S. shippers term Korea a bulk consumer of stainless scrap; since the mill has been in full operation, they say, there's been a steady pattern of buying. While some exporters anticipate a slight cutback in 1990, most believe the steady buying pace will continue and that 1990 business will not differ much from the tonnage purchased in 1989.

In 1988, Korea purchased 10,957 net tons of stainless steel scrap from the United States. In the first 11 months of 1989, more than 58,000 tons were shipped.

Active Steel Scrap Demand

There are reported to be six major steel mills in Korea purchase heavy tonnages of U.S. scrap. U.S. traders say Korea fulfills about 60 percent of its steel scrap needs from internal sources and imports the remainder. Of this imported material, about 70 to 80 percent is said to come from the United States. Published reports indicate that Korean steel output in 1989 reached more than 21 million tons, an astonishing doubling of output in less than a decade.

What kind of steel scrap moves to Korea? Shippers say the items generally in demand include No. 1 and No. 2 steel scrap, bundled scrap, some shredded scrap (for which Korea reportedly pays no premium), plate and structural scrap, and motor blocks.

"Korea today is what Japan used to be, " says a prominent shipper. He notes that, steel scrap exports to Korea in 1990 "are off to a running start" and that business was booked through April in some instances. But, he adds, it's tough to get sufficient transportation and it's tough to get UMB (unstripped motor block) in tonnages desired. The UMB business in the United States is said to be concentrated on the East Coast.

Western shippers indicate that there's a strong market in Korea for steel scrap and they anticipate moving about the same tonnage to Korea in 1990 as in 1989.

In 1988, 2.23 million net tons of iron and steel scrap were shipped to Korea from the United States. In the first 11 months of 1989, 2.35 million net tons were shipped.