Hyundai Steel is up for steel plate price hike owing to increased raw material cost.
According to industry sources, Hyundai Steel – South Korea’s 2nd largest steelmaker, has been pushing to raise the price of its automotive steel plates supplied to Hyundai and Kia Motors owing to hike in raw material (primarily iron ore) prices.
Hyundai Steel is world’s 13th largest steel producing company which recorded a production of 20.48 MnT in CY15.
It is to be noted that, the steelmaker depends on Hyundai and Kia Motors for sales of its automotive steel plates, which accounts for around 30% of its total sales.
However as per a Hyundai Motors spokesperson, Hyundai and Kia Motors are currently negotiating with the local steelmaker to settle on a new price for steel sheets.
The steel industry has been calling for a price hike, citing the increased cost of raw materials, while the auto firms remain reluctant due to a continued decline in operating profits in recent years.
As per the company data, Hyundai Motor’s ratio of operating profit-to-sales dropped to 5.5% in 2016 from 10.3% in 2011. And that of Kia Motors’ slid to 4.7% from 8.1% in the same period.
Hyundai Steel, an affiliate of Hyundai Motor Group, is expected to push for a price hike of about USD 117/MT due to the increased cost of raw materials.
Market analysts are anticipating the two parties to settle on an increase between USD 72/MT to USD 90/MT.
~Sourced
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