South Korea Q1 steel demand down 7%, 2020 outlook gloomy

In the first quarter of 2020, South Korea’s steel consumption fell 6.9% on year to 12.5 million tonnes, as all its major steel-consuming industries and its steel exports and imports had been seriously affected by COVID-19, Derek Wang, assistant manager from Korea Iron & Steel Association (KISA), shared at the 2020 SEAISI e-Conference on July 1.

Construction, auto making and shipbuilding posted slow-downs in the first quarter because of the government’s restrictive measures to contain the spread of virus, he said, and the country’s steel production, declined too though more moderately by 2.4% on year to 18 mn t over January-March, according to him.

Both the declines had deepened from 2019 when the steel production fell 2.2% on year to 73.6 mn t, and consumption down 0.9% on year to 53.2 mn t, he pointed out.

For the whole 2020, the market situation will probably remain gloomy with the negative impact of the pandemic on the global economy and steel trade, Mysteel Global understands from Wang’s presentation.

Construction

Bank of Korea has updated its projection on South Korea’s investment in construction for 2020, predicting it to decline 3.3% on year from the earlier 2.2% on year due to the adverse impact of COVID-19, as even though the government has increased budget to stimulate the economy, not much will be directed in this sector, according to Wang.

The steel orders from the domestic construction had just recovered in 2019 after two years of contractions, reaching KRW166 trillion ($138 billion) from KRW 155 trillion for 2018 on the benefit of the government’s more funding in residential housing and public facilities sectors, he elaborated.

Shipbuilding

As for shipbuilding, the pandemic will lead to declines in both the new orders and deliveries in 2020, with the former to decrease to 5 million gross tonnages (GT) from 17 million GT in 2019 and the latter down to 16 million GT from 22 million GT last year.

As the world’s top shipbuilding country in 2019, South Korea took up around 37% of the global new orders and 29% of the world’s deliveries in 2019, or having rebounded the first time since 2015.

Automobile

South Korea’s automobile production in 2020, similar to Japan and China, is expected to decline too by 11.1% on year for 2020 mainly because of the shrinking demand, Wang cited the estimation from the POSCO Research Institute (POSRI).

In Q1, the country produced 810,000 units of auto, sold 330,300 units domestically and exported 480,000 units, which were in sharp contrast to last year’s 3.95 million units in output, 1.54 million units in domestic sales and 2.4 million units in exports with destinations mainly North America, Europe, Middle East and Oceania, Wang quoted the data from Korea Automobile Association,

Steel trade

Shrinking demand from the overseas market in the middle of the virus attack saw South Korea’s steel exports down 1.9% on year to 7.5 mn t in the first quarter, or accounting for 41.5% of its total production, and among the all, flat steel exports accounted for 5.9 mn t or 78.6% of the total exports in Q1, KISA’s data showed.

Korea’s steel exports to major destinations

Source: KISA

South Korea’s steel imports fell more sharply by 20.1% on year to 3.6 mn t over January-March, among which, flat steel accounted for 2.2 mn t and longs 700,000 t, the balance being pipes and others, according to KISA’s data.

Korea’s steel imports from major suppliers

Source: KISA

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.

Photo credit: worldsteel / Seong Joon Cho