South Korean HRC Importers Turn Active On Competitive Offers from China

South Korea based HRC importers have turned active and are procuring material from China amid competitive steel prices along with tight supply in domestic market.

Lower HRC export offers from China- Chinese steel prices shown sharp decline from the month of Oct both in domestic and export market.On monthly basis Chinese HRC export offers fell by USD 60-65/MT and are hovering at USD 500-505/MT FoB basis in the month of Nov’18.Thus devaluation of currency yuan against USD and USA China trade war collectively dragged down Chinese steel prices.

Since Chinese steel exporters is offering HRC (SS400) at USD 530/MT CFR Korea, which is recorded as all time low this year.Thus large-scale coil centers, cold-rolled(CR) and steel pipe makers are reportedly hoping to sign contract with China.

A source from the Korean import industry said, "Considering that the distribution price of Chinese imports is around KRW700,000/MT (USD 621/MT), it seems that the import price has reached to the point where importers could secure price competitiveness”.

Tight supply in somestic Market- Korean based major steel maker, POSCO has been repairing its HR production lines since October.The repair of its first HR mill is completed in Pohang on 24th October.However from 20th Oct, the company will repair its second HR mill in Gwangyang for 59 days.

Meanwhile workers at Hyundai Steel at Dianjin mill went on for strike for eight days.This result to company’s lowest HR production in Oct which is around 213,000 tons.Thus creating short supply in domestic market

Absence of HRC Imports from Japan- Japanese based JFE steel Steel has suspended the operation of its second furnace since October 23 due to a failure. The suspension is scheduled until mid-November.However its affect in production is expected to continue through late December. As a result, the amount of the cut in production is estimated to be around 400,000 tons.

Thus Korean steelmakers are eyeing on lower HRC export offers from China, tight supply in domestic market coupled with absence of HRC imports from Japan.