Prospects brightening for Korean steelmakers amid surge in demand and price

[Photo provided by Hyundai Steel]

Earnings prospect for Korean steelmakers are looking up as steel mills run at full capacity upon faster-than-expected recovery in automobile, vessel and construction demand that has stoked steel prices.

According to sources from the steel industry on Wednesday, Posco, the country¡¯s top steelmaker, is putting off repair work of its No. 3 cold-rolled steel plant in Gwangyang, South Jeolla Province, to April, to meet growing demand. The work was initially scheduled for March 8-13.

Cold-rolled steel is hot-rolled steel thinned with precise machinery at room temperatures and with smooth surface. It is mainly used to produce vehicles, home appliances, and steel pipes.

Hyundai Steel also moved facility maintenance work to early this year to swiftly ¡°normalize operations to expand product supply.¡±

Strong demand for steel has lifted the prices of raw materials, triggering steelmakers to hike their steel product prices.

Posco already upped the price of its hot-rolled steel sheets by 80,000 won ($72) per ton in January and 100,000 won in February. It also raised the price by another 50,000 won in March.

Hyundai Steel also plans to up the prices by 50,000 won next month.

According to the Ministry of Trade, Industry and Energy, the price of iron ore sold at the Chinese port of Qingdao was $175.96 per ton as of Monday, up by more than $10 from the beginning of the year.

An unnamed industry official said that steel market conditions improved on reduced exports from China amid recovery in Chinese domestic market. Steel demand is stable on the back of economic stimulus measures in almost every country to combat the Covid-19 slowdown.

Another industry official said that demand for steel plates is expected to surge, further pushing up prices, as demand for automobiles and vessels improve, and supply of environmentally-friendly steel materials expands such as for electric vehicles and liquefied natural gas-powered ships.

Demand for both cold- and hot-rolled steel is also forecast to rapidly grow on improved consumer electronics market.

Prices of materials such as steel for building construction are also heading north on growing expectations for a rise in demand for structural steel after the Korean government announced plans to supply 836,000 new housing by 2025.

The price of steel scrap, a raw material of steel bars and shape steel, also rose sharply in February.

The retail price of domestic steel bar went up from 700,000 won per ton in the start of the year to 750,000 won this month.

[¨Ï Maeil Business Newspaper & mk.co.kr, All rights reserved]