Navigating Uncertainty: South Korea's steel market outlook for 2024

The outlook for the Korean steel industry in 2024 is expected to be a tale of two halves, with a strong first half fueled by Chinese stimulus, followed by a potentially subdued second half marked by sluggish demand and global economic challenges. Here is a breakdown of the key factors shaping the market:

Price hike aspirations:

• China's economic stimulus: The Chinese government's economic stimulus measures, including infrastructure investments and interest rate cuts, are boosting domestic steel demand and export prices to Korea. This is creating a warm atmosphere in the market for the first quarter.
  
  
• Rising raw material prices: International atomic ash prices like iron ore and coking coal are strong, supporting higher steel prices. Additionally, domestic coal prices in China are expected to remain high due to production cuts and Lunar New Year holidays.
  
  
• Inventory reduction in China: Winter production cuts and government policies have reduced steel inventories in China, potentially leading to higher prices in the short term.
  
  

Challenges to watch:

• Sluggish domestic demand: The Korean construction industry is expected to remain in a slump in 2024, impacting the demand for hot-rolled and cold-rolled steel. The automobile market growth is also likely to slow down, further dampening demand.
  
  
• Uncertain sustainability of China's boom: While China's economic stimulus is promising for the first quarter, its long-term sustainability is uncertain. Issues like job market instability and household debt could hinder the recovery of downstream industries like automobiles and home appliances.
  
  
• Supply and demand imbalance in Korea: Domestic plate manufacturers are likely to attempt price increases due to strong Chinese markets and supply constraints. However, this could lead to a tug-of-war with buyers as the demand market remains weak.
  
  

Overall outlook:

The Korean steel industry is likely to experience a price increase at the beginning of 2024 due to favourable factors like China's stimulus and rising raw material prices. However, this momentum may not last long. As domestic demand remains sluggish and uncertainties surrounding China's economic recovery grow, the market is likely to face downward pressure in the second half of the year. Manufacturers will need to carefully manage supply and demand and pricing policies to navigate these challenges and protect their margins.

Note: This article has been written in accordance with an article exchange agreement between Steeldaily and SteelMint.