South Korea’s domestic automobile production is expected to increase by 3.4% in CY’22 to 3.6 million units compared to CY’21 levels. Production volumes are expected to recover due to an increase in automobile exports and a recovery in overseas demand, majorly from USA and other emerging markets, according to the Korea Automobile Manufacturers Association.
However, domestic automobile demand is expected to remain stable at 1.74 million units, up 0.3%, from CY’21, due to restricted supply of semi-conductors, weak government support measures, and launch of electric vehicle models.
In terms of exports, it is expected that 2.18 million units of automobiles will be sold in overseas markets this year, 6.3% higher than in CY’21, because of pent-up demand for automobiles from last year, and some stability in automotive semiconductors supply from the second half of the year.
However, logistics disruptions persist as the Covid-19 virus spreads in South East Asia.
What to expect in CR steel market in CY’22? In the first half of CY’21, the domestic cold-rolled (CR) market grew on account of recovery in domestic and global demand. Therefore, it is expected that, this year, similar conditions will prevail.
Domestic cold-rolled steel sheet production was at 7.18 million tonnes (mn t) and sales volume were at 7.02 mn t in Jan-Nov’21, up 6.7% and 3.8%, respectively, compared to Jan-Nov’2
Hot-rolled steel is a raw material for cold-rolled steel sheets. However, this year’s cold-rolled sheet supply is expected to be limited owing to POSCO’s scheduled repair of its Gwangyang Works blast furnace over Feb-Jun’22.
As re-rolling mills purchase about 10,000 t of hot-rolled steel from POSCO every month, it is expected that the re-rolling mills will struggle to procure this raw material in the domestic and overseas markets in the first half of this year.
Home appliance market stagnant
The global home appliances industry has been aggressive. Due to the pandemic, the so-called ‘stay at home’ phenomenon is getting stronger. As the replacement cycle for home appliances has not been largely met after about two years of Covid-19 , the outlook for this year’s earnings in the home appliance industry is expected to slow down.
The export conditions for home appliances are expected to get more difficult compared to Q4CY’21 due to drop in export prices, rising manufacturing and logistics costs, as per the Korea International Trade Association.
The global home appliances industry is pinning hopes on new concepts such as OLED TVs, green appliances, and focusing on targeting customer needs that have become more diversified owing to the post-pandemic lifestyle changes. In particular, LG Electronics, which has decided to significantly increase investments in the home appliance sector, is ready to launch an expansion strategy aggressively.
China’s exports
Owing to the Chinese government’s full-fledged steel production cuts in the second half of last year, imports of cold-rolled sheets from here in Sept-Nov’21 were assessed at 48,720 tonnes, up 153% compared to the same period of the previous year.
It is expected that domestic cold-rolled demand will adjust to the changes in the export volumes from Chinese mills.
~Inputs from SteelDaily
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