South Korea’s hot-rolled (HR) steel prices have been increasing of late on the back of soaring prices of iron ore and coking coal. It is anticipated that in April, too, HR prices will rise due to the same reasons in the domestic and overseas markets.
In the beginning of Mar’22, iron ore prices were ruling over $150/t while coking coal was assessed at more than $670/t. However, when domestic steelmakers in South Korea raised HR prices by up to KRW 100,000/t, coking coal prices decreased to $500/t levels. On the other hand, iron ore prices too dropped but have bounced back to $150/t levels currently. So it is unlikely that prices will rise sharply in the near term due to demand recovery.
Furthermore, it is anticipated that with dropping coal prices, a rise in global steel prices might also be obviated.
Supply of HR products may decrease
POSCO’s repair of hot-rolling facilities is scheduled to be carried out in a situation in which crude steel production stands reduced due to the renovation of the Gwangyang Works No. 4 blast furnace. Moreover, Hyundai Steel is unable to expand its external sales volume. Imports from China are expected to be limited because of the country’s export policy and all these factors will impact the supplies of HR products in the domestic market during April.
Demand recovery?
Demand from the downstream industries such as automobile, home appliances, construction and machinery has not recovered as per expectations.
Therefore, increasing prices due to supply shortage amidst sluggish domestic demand will be difficult. For instance, sales of hot-rolled optical steel strips decreased by 13.1% in February compared to the same period of the previous year.
The Chinese government’s policy to curb inflation and the imposition of export tariffs are expected to coexist with factors that will increase the prices of hot-rolled products for the time being.
Note- This article has been published in accordance with an article exchange agreement between SteelDaily and SteelMint.
Leave a Reply