South Korea’s heavy plate prices are likely to increase further in April, 2022 on the back of higher raw material prices. The imbalance between supply and demand has increased the possibility of prices increasing.
Steelmakers fail to reflect rise in raw material prices
In March, Korean steel producers were unable to reflect the increasing raw material prices in heavy plates, hence, making it imperative to implement the price hike now.
Iron ore (Fe 62%) prices in China have crossed $160/t CFR levels while Australian coking coal prices were over $450/t FOB and in China, at around $440/t CFR levels.
In addition, export offers for heavy plates (SS400) remained low at around $900/t CFR for June shipments because of short supplies.
Factors supporting price hike
Soaring raw material costs: Rising raw material costs, a decline in profitability of manufacturers due to lower margins, increase in demand despite higher imports are urging steel manufacturers to increase heavy plate prices.
Increase in prices admist supply concerns: Heavy plate prices are expected to increase further due to supply shortage and if mills implement more hikes in the near term. During the first week of April, heavy plate prices in the domestic market stood at around KRW 1.4 million/tonne.
In January-February, 2022, heavy plate production by South Korean mills rose by 4.7% to 1.54 mnt, while sales stood at 0.73 mnt, up 5% compared to the same period last year. However, exports declined by 47.2% to 0.22 mnt in January-February against 0.42 mnt in the corresponding period last year.
It is anticipated that the price hike will be absorbed in the market considering that sales in April will increase as demand from the downstream sector is strong.
Chances of additional price hike
The chances of additional price hikes in heavy plates is high, taking rising raw material prices and supply issues into consideration.
Note- This article has been published in accordance with an article exchange agreement between SteelDaily and SteelMint.
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