- Year-end seasonality keeps South Korea stainless steel market stagnant
- Rising costs and currency pressures fuel price hike speculation
SteelDaily: South Korea’s stainless steel market remained largely stagnant in the fourth week of December, with year-end seasonality continuing to suppress buying activity and offering little sign of a demand recovery. However, expectations of a potential price hike are gaining traction as cost pressures from a weaker exchange rate and elevated nickel prices intensify. While transaction volumes are unlikely to improve meaningfully toward the close of the year, some companies are advancing inventory purchases to optimise year-end value-added tax positions and prepare for a possible price increase early next year.
Within the import segment, concerns are mounting that the won-dollar exchange rate could move closer to the KRW 1,500/t level, prompting discussions around unit price increases in January. Some suppliers are already encouraging sales by flagging a potential hike of around KRW 50,000/t, effective toward the end of the month. Although government intervention has helped ease the currency from its recent peak, import cost pressures remain elevated due to persistent financial market volatility and the exchange rate still being significantly stronger than a month ago.
On the supply side, Indonesia’s Tsingshan has adopted a more aggressive pricing stance, while Chinese domestic stainless steel prices, after bottoming out, have shown a modest rebound. This has raised the likelihood of higher Asian and overseas export offers, fueling market speculation that POSCO’s January shipment prices — earlier expected to remain unchanged — could be revised.
Despite these developments, overall market sentiment remains weak. With year-end approaching, buying power among end-users is limited, and uncertainty over the economic outlook for early next year continues to weigh on purchasing decisions.
Nevertheless, market participants broadly agree that overall conditions remain weak. With the year-end approaching, purchasing power among end-users is limited, and uncertainty surrounding the economic outlook for early next year continues to weigh on sentiment. Distributors note that while there is clear cost-based justification for price increases, the extent to which these can be passed through to actual transaction prices remains uncertain, warning that aggressive price hikes driven by exchange rate and cost pressures could trigger a short-term slowdown in trading activity.
During the week, market prices were largely stable with minimal fluctuations. GS steel prices remained broadly in line with imported material, and sales prices showed little movement. 304 cold-rolled stainless steel was assessed at KRW 3.30-3.35 million/t, while imported 304 cold-rolled steel traded at KRW 2.90-2.95 million/t. GS cold-rolled steel prices were heard at KRW 2.95-3.00 million/t. However, should the dollar continue to strengthen and importers push more firmly for price hikes, an upside of around KRW 50,000/t from current levels cannot be ruled out.
The Chinese stainless steel market continued its upward trajectory this week, with Tisco’s Wuxi 304 cold-rolled steel price reaching RMB 13,650/t, up RMB 250/t from the previous week. In the broader Asian market, 304 stainless steel prices (CIF) ranged from $1,800-1,850/t, marking a $20/t increase w-o-w, according to market sources.
This rebound across China and Asia is attributed to a combination of factors: rising nickel prices, policy shifts in Indonesia’s nickel sector, and export price hikes by Indonesian Tsingshan. As a result, market attention is increasingly focused on whether prices have reached their floor. While many companies continue to adopt conservative sales strategies through year-end, they are also reassessing pricing and inventory management plans in preparation for January and February.
Note: This article has been published in accordance with a content exchange agreement between SteelDaily and BigMint.
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