South Korea’s hot rolled coils and plates exports have dropped a sharp 19% over Jan-Jul’21 compared to the corresponding period last year (CPLY). The volumes dropped to 4.4 million tonnes (mn t) in the first seven months of the current year compared to 5.4 mn t in CPLY.
Overall flat steel exports from South Korea dropped 3% in Jan-Jul’21 to 12.82 mn t compared to 13.15 mn t in CPLY. However, HRCs and plates comprise the largest chunk of South Korea’s flat steel exports.
On a m-o-m basis, HRC and plates exports were down 9% to 0.57 mn t in Jul’21 against 0.63 mn t seen in Jun’21.
Overall flats exports in Jul’21 were, however, slightly up by 1.15% to 1.77 mn t compared to 1.75 mn t in Jun’21, mainly pulled up by pipes and tubes and electrical steel exports.
Reasons for drop in HRC and plates exports
- A rebounding global economy boosted prices of iron ore, a key raw material, from $154.9 per tonne in Feb’21 to $226.5 in May’21 — a 46% increase which impacted South Korea’s steel producers.
- A resurgence in Covid-19 led to temporary lockdowns that also impacted plants and logistics. In fact, the South Korean government, on 12 Jul’21, imposed the highest level of social distancing restrictions (Level 4) in Seoul and neighbouring areas until July 25 as the viral disease was spreading at a rapid pace. This has been subsequently extended till 5 Sept’21.
- Increased demand for eco-friendly ships led to an increased demand for steel plates from the domestic shipbuilders, which led to lesser focus on the exports market. Korea’s two largest steelmakers, POSCO and Hyundai Steel, proposed to raise domestic prices of steel plates used by ship-builders in H2 by $1,200/t, up 64% compared to H1.
- HRC sales to automobile companies were impacted because of the global semi-conductor shortage that is impacting automobile production in several countries.
Outlook
With the rainy season likely to recede in many Asian countries, construction activities are set to resume. Plates are required in construction and so may see a turnaround in terms of exports. Cooling iron ore prices may help mills reduce their production costs. HRC exports can be under pressure till the global semi-conductor shortage eases, which is not likely in the short term.
~Madhumita Mookerji
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