South Korean hot-rolled plate manufacturer, Dongkuk Steel, increased its prices by KRW 20,000-30,000/t ($17-25/t) for Feb’22 deliveries. Following the suit, other major manufacturers, POSCO and Hyundai Steel, have also decided to increase prices by the similar quantum.
Major factors leading to the price hike:
Demand from shipbuilding industry: Demand for heavy plates took a jump with a significant rise in shipbuilding orders in CY’21. Where, the shipbuilding orders were on a decline since CY’18, there was a massive spike in CY’21 taking the volumes to 1,744 compensated gross tonnage (CGT) contrasted against 823 CGT in CY’20.
Decline in imports: The import volumes of the country declined by around 23% to 1,13,935 tonnes (t) in Dec’21 as against 1,48,212 t a month ago. The increase in global plate prices weighed on the import volumes. Export offers of China-origin heavy plates ranged USD 855-875/t CFR for end-March or early-April shipments. These offers are up by about $20-25/t compared to the levels before the Lunar New Year holidays, as per the Steel Daily report. Other issues are limited allocations from exporting countries, for instance, China’s shipbuilding industry is showing good demand for plates, while in Japan, manufacturers have limited export capacity over facility issues.
Increase in cost burden: The rise in prices of raw materials such as iron ore and coking coal has led to an increase in crude steel production costs. For instance, the average monthly prices of Australia-origin premium hard coking coal (premium HCC) spiked to $410/t FOB basis in Jan’22 contrasted against $340/t FOB a month back and $356/t FOB in Nov’21, as per data maintained with CoalMint.
~This article has been published under an article exchange agreement between Steel Daily and SteeMint.
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