Hot-rolled coil (HRC) and steel plate exports by the world’s sixth-largest steel producer, South Korea, decreased by 15.7% year-on-year to 3.79 mn t in the Jan-June’21 period compared with 4.5 mn t in H1 CY’20, latest customs data compiled by SteelMint reveals. However, exports of hot-rolled flat steel products witnessed a marginal rise of 1.3% to 0.63 mn t in June’21 as against May.
Exports to China drop 52% y-o-y in H1 CY’21
Exports to the US rose sharply by over 80% in H1 CY’21 to 0.43 mn t as against 0.23 mn t in the corresponding period last on account of supply shortage amid strong steel demand in that country. While exports to Japan were recorded at 0.58 mn t in the first half of 2021, HRC and plate exports to India declined marginally to 0.48 mn t. However, exports to India rose more than 27% m-o-m to over 92,000 t in June compared with about 72,000 t in the preceding month.
Significantly, South Korea’s HRC exports to China dropped by over 52% on year to 0.36 mn t as against 0.76 mn t in H1 CY’20. Exports to Turkey likewise declined by over 15% during the period during review, although on a monthly basis HRC imports by Turkey declined over 60%. It deserves mention that Turkey initiated an anti-dumping probe into HRC exports from the EU and South Korea in Jan’21.
Domestic demand scenario & exports
South Korea’s crude steel production was at 6 mn t in May’21, as per World Steel Association data, up from 5.9 mn t in April. Despite the recent upsurge in COVID-19 cases in that country, domestic demand for flat steel from the automobile and shipbuilding industries has been robust. Q1 FY’21 witnessed auto exports of over $27 billion, while technologically advanced South Korean shipbuilders bagged 52% of all global orders in Q1.
South Korean steelmakers have raised prices in harmony with rising global steel prices, as the post-pandemic stimulus by governments continue to generate demand for steel, while supply remains tight. Domestic prices have risen in tandem, while steelmakers try to find ways of satisfying domestic steel demand.
Going forward, it should be noted that China’s move to slash rebate for steel exports and sustained efforts are controlling steel production is expected to keep steel prices firm.
In contrast, domestic steel demand had taken a severe hit in South Korea in Q2 CY’20, with the pandemic impacting automobile exports by the country. All the leading steelmakers had revised crude steel production guidance for 2020, although the recovering Chinese economy offered a great opportunity for exports to South Korean producers.
In fact, Chinese domestic prices for HRC were higher compared with export offers in May’20 and through to June-July’20, as steel demand in China soared while supplies were yet to catch up after the pandemic.
This explains the 52% drop in exports to China in H1 CY’21 on a y-o-y basis.
Export price indications for HRC are currently at $ 1,030-1,050/t FoB levels.
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