- POSCO’s pricing response and won-dollar exchange rate to shape market trends
- Weak domestic demand and lower import prices increase pressure on distributors
Chinese stainless steel offers to South Korea for December shipments have intensified price pressure in the domestic market, with 304 hot-rolled (HR) contract prices falling below KRW 3 million/t ($2,161/t). Offers for cold-rolled (CR) stainless steel have also declined from the previous month, extending the downward trend in the Korean stainless steel market.
Industry sources indicated that Chinese 304 HR stainless steel (mill edge) was recently offered at $2,090/t FOB, while 304 CR stainless steel (slit edge) offers stood at $2,280/t FOB. After factoring in transportation, customs clearance and financing costs, the proposed contract prices were estimated at KRW 2.9 million/t ($2,087/t) for HR and KRW 3.16 million/t ($2,274/t) for CR.
Compared with contract prices indicated in September, the latest offers represent a decline of more than KRW 120,000/t ($86/t) for HR and over KRW 50,000/t ($36/t) for CR. The relatively larger reduction in HR prices has widened the price gap between the two product categories, making it increasingly difficult for imported HR stainless steel to sustain prices above KRW 3 million/t ($2,161/t) in the domestic distribution market.
Exchange rate fluctuations weigh on import prices
Dollar-denominated offers for Chinese stainless steel destined for South Korea have remained broadly stable in recent months. However, fluctuations in the won-dollar exchange rate have continued to push down contract prices in Korean currency, making exchange rate expectations a key factor in import purchasing decisions and price competitiveness.
Offers for Chinese 304 CR stainless steel have generally remained within the $2,200-2,320/t range on a delivered basis, despite some monthly variations. Consequently, importers must assess not only overseas mill offers but also the potential impact of currency movements on landed costs and future contracts.
Weak demand adds to distribution market pressure
The decline in new contract prices is expected to add to the challenges facing South Korea’s stainless steel distribution market, where demand remained weak following a sluggish third quarter. Market conditions showed little improvement in October, while purchasing activity among intermediate distributors continued to contract.
Imported 304 CR stainless steel was reportedly priced at KRW 3.2 million/t ($2,305/t) in the domestic distribution market, with some import substitutes offered at KRW 3.25-3.3 million/t ($2,341-2,377/t). In comparison, genuine 304 CR stainless steel from POSCO was priced at KRW 3.6 million/t ($2,629/t).
The latest Chinese CR offers are around KRW 90,000-140,000/t ($65-101/t) below comparable imported material prices in the domestic market, increasing competition for existing inventory. Lower-priced incoming shipments could further widen the gap between replacement costs and current selling prices, adding to inventory-related pressure on distributors.
POSCO pricing response remains a key factor
Market participants are closely watching POSCO’s pricing strategy, particularly whether the company adjusts prices selectively for end-users and distributors to narrow the gap with imported material.
A broader pricing response could intensify competition between domestic and imported stainless steel, while maintaining current prices could make sales volume growth more challenging amid weak demand and lower import offers.
Outlook
South Korea’s stainless steel market is expected to remain under pressure through the end of 2026, as subdued consumption, lower import contract prices and currency fluctuations weigh on distribution prices. Although dollar-based Chinese offers have remained relatively stable, further movements in the won-dollar exchange rate and POSCO’s pricing decisions will be key factors influencing domestic price trends.
Note: This article is published as part of a content exchange agreement between SteelDaily and BigMint.
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