The South Korean government has asked the country’s steelmakers and processors to refrain from raising their prices, despite spiking global commodity prices, emphasizing instead the need for steelmakers to seek mutual growth with their manufacturing counterparts, including carmakers and shipbuilders, according to local reports.
Addressing a ceremony in Seoul on Thursday to mark the nation’s 23rd Steel Day, Jang Young-jin, first vice minister of the powerful trade, industry and energy ministry which oversees the steel sector, noted that soaring raw materials costs around the world posed grave challenges to local steelmakers, already reeling from the ongoing pandemic-induced global supply chain disruptions.
However, the steel industry will overcome the present difficulties by unified efforts and by making long-term, quality-oriented investments, Jang insisted.
“We need a growth model whereby unfavourable business and trade conditions from within the country and abroad can be countered effectively,” local daily Korea Times quoted Jang as saying.
“The slew of adverse global business conditions notwithstanding, continued innovative efforts to develop new products and upgrade manufacturing processes overall will spell new growth opportunities, generating much-needed momentum to weather the challenges posed by heightened global trade uncertainties and carbon neutrality requirements,” he added.
At the event, the country’s two largest steelmakers — POSCO and Hyundai Steel — and the state-run Industrial Bank of Korea (IBK), signed an agreement to establish a Won 150 billion ($119 million) fund to help local steelmakers receive loans at rates 1.43 percentage points cheaper than the market rate. POSCO and Hyundai Steel contributed Won 50 billion and Won 20 billion won, respectively, while IBK gave Won 80 billion, the daily said.
Steel Day is an annual event first held in 2000 to commemorate June 9, 1973, when POSCO first produced molten iron domestically at its Pohang works in the south-eastern corner of the Korean peninsula.
The rise in steel prices is already causing difficulties for major steel consumers such as the Korean shipbuilders, notes Will Biyun, an analyst with NH Investment & Securities in Seoul. “The price of thick plate, which accounts for 20% of the total building cost of a ship, rose by Won 500,000/tonne last year,” he noted, pointing out that recently, the yards had agreed with the steelmakers to pay an extra Won 100,000-150,000/t for ship plates during the January-June half of this year.
“(The jump in steel prices) is one of the factors that caused Korea Shipbuilding & Offshore Engineering, Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering to be in the red last year,” he noted.
Written by Russ McCulloch, russ.mcculloch@mysteel.com
This article has been published in accordance with an article exchange agreement between Mysteel and SteelMint.
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