South Korean steel giants, POSCO and Hyundai Steel, saw decrease in Hot rolled (HR) steel production and sales in May 2024 as highlighted in a recent industry report. This decline is attributed to a combination of facility maintenance and a shrinking domestic market.
Key findings:
Production: Hot rolled steel production for external sales at both companies in May was 845,000 tonnes (t), a decrease of 8.6% compared to the previous month. This marks the first time since September 2023 that production fell below 900,000 t.
Sales: Sales volume of hot rolled steel also declined in May, with both companies recording 875,000 t for external sales, representing a 3.8% decrease from the previous month. This is significantly lower compared to the 1 million tonnes (mnt) recorded in December 2023.
Breakdown by sales type: Domestic demand saw a steeper decline of 6.1% compared to the previous month, reaching 535,000 t. Exports remained flat at 340,000 t, accounting for 39% of total sales. Domestic sales currently hold the majority share at 61%.
Causes: Facility maintenance at POSCO and Hyundai Steel during April and May is acknowledged as a contributing factor. However, a decline in orders from domestic companies due to increased cost burdens is also suspected as a contributing factor to the shrinking market size for hot rolled steel.
Cumulative performance: The negative trend extends to year-to-date figures. Cumulative production of hot rolled steel for external sales from January to May 2024 decreased by 5.7% compared to the same period in 2023, reaching 4.52 mnt. Sales volume for the same period also declined by 4.8%, totalling 4.535 mnt.
Outlook:
The hot rolled steel market in Korea appears to be experiencing a contraction. While facility maintenance played a role in the recent decline, the decrease in domestic demand due to rising costs is a more concerning long-term trend.
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