Hyundai steel freezes HR product prices for October

Following POSCO, Hyundai Steel has also decided to freeze the domestic prices of hot-rolled (HR) products in October. Prices of raw materials such as iron ore and bituminous coal are still high. It is being said that the prices in October will be a roll-over of September levels because demand is not improving and keeping in mind the global hot-rolled prices. Prices were raised by Korean Won (KRW) 50,000 per tonne (t) ($42/t), as per Steel Daily.

The price of Australian iron ore (Fe 62%, CFR) fell to $110 per tonne in early October, significantly lower than before.

Price hikes in hot-rolled not easy on customers

Korea's domestic hot-rolled steel prices were frozen in October since , customers will not be able to absorb the September increase.

Hot rolling mills officials said that domestic hot rolling mills such as POSCO and Hyundai Steel increased prices. In addition, concerns over supply have not been resolved, China's major hot-rolled exporters, Bongye Steel and Rijo Steel, have decided to suspend offers for shipments after November.

Hot-rolled distributors had already pushed for a small hike at the end of August, but the increase was not reflected properly till the last week of September. These were traded in the range of 1.3-1.32 million won per tonne ($1,100-1,110/t).

The price of imported goods from China is slightly lower than this, at 1.3 million won per tonne ($1,093/t).

It seems difficult to apply a price increase for September as demand is hardly recovering even after the Chuseok holidays. However, there is growing interest in whether the reduction in the inflow of imported goods from China and the arrival of the seasonal peak demand season will play a role in hiking prices in the future.

The possibility of reduced inflow of Chinese products is highly likely to be a factor in restoring prices in October.

Factors to impact future HR prices

News of China's production cuts, possible higher domestic supply, sharp declines in iron ore prices and sharp rise in bituminous coal prices are expected to act as significant factors for HR prices, going forward.

Given the slowdown in demand, the possibility of decrease in inflows from China is likely to slow down the price decline. In addition, although, iron ore prices have plummeted, hot rolling companies are still using imported iron ore at high prices, and the sharp rise in bituminous coal prices is unlikely to lower the cost of raw materials in the future.

If China's production cuts and imports are reduced, there is a growing concern that Korea's domestic HR supply, which has been stable, may be under pressure.

It provides room for some adjustment in terms of supply and a halt in the price decline.

It seems unlikely that the price of bituminous coal will plunge in the short term, and many forecasts suggest that the possibility of a sharp decline in HR prices in the short term is quite low, considering Australia iron ore supply issues with the arrival of summer.