The price of iron ore, a key ingredient in steel production, hit its highest level in more than six years this month, exceeding $ 130 per tonne.
In addition, price cuts for Japanese competitors have further increased pressure on domestic steel companies still struggling to cope with sluggish demand amid the Covid-19 pandemic.
According to the Ministry of Commerce, Industry and Energy and the Korea Resources Corporation, the price of iron ore from the Chinese port of Qingdao as of September 14 was $ 130.17 per ton, the highest in six and a half years. The price has since slipped slightly to $ 124.26 a ton as of September 25, but the recent iron ore price is still much higher than the $ 80 range in February.
Fluctuations in iron ore prices are tracking the health of China’s economy, which began recovering in the second quarter following disruptions caused by the country’s initial coronavirus outbreak.
China, which produces more than half of the world’s iron ore, was also the world’s largest importer of the commodity in July as its construction and manufacturing industries recovered. Iron ore imports to China jumped 10.8 percent this month from the previous month, reaching a record high.
Market watchers predict that the iron ore price will remain in the $ 120 /t range throughout the year due to increased demand.
Rising prices for steel products
Domestic steelmakers including Posco and Hyundai Steel have raised retail steel prices on the back of rising iron ore prices.
Earlier this month, Posco, the world’s fifth-largest steel company by volume, raised the retail price of hot coil by 50,000 won ($ 43) per tonne and cold rolled products by 20,000 won to 40,000 won per tonne, depending on the type. … products.
Likewise, Hyundai Steel recently increased the retail price of hot coil by 50,000 won per tonne and cold rolled by 60,000 won. Korea’s second largest steelmaker after Posco, it also raised steel sheet prices by KRW 30,000 per tonne.
Metallurgists are trying to ward off rising iron ore prices for their major suppliers, including carmakers Hyundai Motor and Kia Motors.
Hyundai Steel said it has yet to reach an agreement with them.
“We are still in negotiations and nothing has been achieved,” said Lee Jong Hwa, a Hyundai Steel spokesman.
Posco declined to comment on the matter.
Cheaper imports from Japan
Meanwhile, Japanese competitors are cutting prices for local steelmakers by offering cheaper I-beams, which are commonly used in buildings, trailers, bridges and more.
Korea’s I-beam imports from January to August totaled 271,871 tons, down 24.2 percent from last year, according to the Korea Iron and Steel Association.
Imports from Japan rose 55.1% over the same period to 114,835 tons. They accounted for 42 percent of Korea’s total imports, a big jump from 2017 to 2019, when imports from Japan were only 13 to 22 percent.
“Previously, the price of steel products in Japan was higher than that of domestic steel producers. But due to difficulties with Covid-19, Japanese steelmakers have exported products to Korea at a lower price. The price was lower than that of domestic steel producers. ” Lee said.
She added that iron ore prices, competition from Japan and a general sluggish demand for steel products due to declining auto production and construction projects have all exacerbated the difficulties for the steel industry.