The rise in global graphite electrode (GE) prices have started concerning the South Korean EAF (Electric arc furnace) steel producers. In the first quarter of FY19, the average contractual import price for GE coming from Japan had touched USD 12,300/MT an increase of USD 10,000/MT against the corresponding quarter of previous fiscal whereas the graphite electrodes coming from China which is an epicentre of price hike has touched USD 14,422/MT in customs clearance in June quarter.
In the ongoing quarter of Jul-Sep’18, the GE prices (contractual) in South Korea from Japan are heard at USD 11,254/MT against USD 6,668/MT in the corresponding quarter of last fiscal year.
Now as the price of graphite electrodes is increasing the negative impact of the same on the country’s steelmakers is also rising. This is because earlier the EAF steelmakers’ pricing of their steel was largely influenced by the steel scrap prices and the impact of GE and other alloys was limited. The end users SeAh Besteel (speciality steel producer) and Hyundai Motors also made adjustments in their prices if the scrap prices fluctuated by more than 5%. However, the rise in cost of subsidiary material such as GE is still not reflected in the final product prices.
However, the steelmakers now want to reflect the price of electrodes due to rising costs. Steelmakers have pointed out that the cost of rebar have risen by 20,000 won per tonne (USD 18/MT) against previous year and is currently trending at 700,000 won per tonne (USD 621/MT).
In terms of profitability, although the profits of companies are increasing, a significant portion should be returned as price rise. The operating profits of Hwangyoung Steel – a fulltime rebar subsidiary climbed to 4.7% in Q1 FY19 whereas speciality steelmaker SeAh Besteel experienced sluggish results during the first half of 2018.
“Rebar shipments are showing strong growth and there is no inventory. Rebar prices have also risen significantly but along with this price rise the cost of production is also increasing leaving steelmakers emptyhanded”, quoted a steelmaker in South Korea.
Inputs from Steel Daily
Leave a Reply