As per the market reports, South Korean steel giant, Dongkuk Steel’s heavy plates supply is likely to suffer due to disruption in slab procurement from its flagship company, CSP (Companhia Siderúrgica de Pecém) in Brazil. CSP is a joint venture between Brazilian miner Vale, which owns 50%, South Korean steelmaker Dongkuk Steel (30%) and Posco (20%). The company has slab manufacturing capacity of 3 MnT per annum.
Dongkuk Steel which is South Korea’s second largest EAF steel producer is engaged in the manufacturing of steel plates for shipbuilding and construction sector. For its plate manufacturing, the company procures slabs majorly from CSP, Brazil.
However, a delay in shipment of slabs has been reported from CSP which will allegedly impact Dongkuk’s plates production. An official from Dongkuk Steel has confirmed this in a statement saying “Brazilian CSP slab which was originally scheduled to be shipped in early June is expected to enter Korea by the end of the month due to delayed shipment, creating disruption in the procurement of heavy plates material”.
Usually it takes at least two to four months for CSP’s slabs from Brazil to reach Dongkuk Steel’s Dangjin plate mill and in case of such long-distance procurement hurdles usually arise either in local production or shipment or in port entry.
The delay in slab supply from CSP has put Dongkuk Steel in jeopardy. The company’s monthly average heavy plate production is around 70-80 thousand tonnes and the steel mill is estimating a cut of roughly 50% in its plate production in the month of June.
Dongkuk Steel is currently concentrating on procuring emergency supplies of slabs to minimize the consequences of shortage in slabs supply. The company had entered in to alliance with Tokyo Steel in Feb’18 and its slab supplies are expected to reach South Korea in mid-June. In addition to this, Dongkuk Steel is seeking to enter into contract with Japan’s JFE Steel to meet its emergency supplies. However, temporary disruption of plates production seems to be inevitable because of the limited means of emergency procurement.
An official from Dongkuk Steel said that “ We are currently in close consultation with JFE Steel regarding emergency procurement of slabs and expect positive results. We are not considering any countermeasures such as cancelling of plates supply contracts due to disruption in material procurement. We are trying to meet the contracted quantity delivery as early as possible.
Sources suggest that the Dongkuk Steel’s disruption in slab procurement is expected to be resolved by the end of Jun’18.
Inputs from SteelDaily
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