South Korea: Hot-rolled steel sales decrease y-o-y in March'24

South Korea's hot rolled steel sales in March 2024 fell by 7.3% y-o-y to 1.219 million tonnes (mnt) compared to March 2023, whereas sales rose by 11.6% m-o-m against February 2024, as per data by the Korea Steel Association (KSA). The significant increase in exports is a major factor behind this trend. However, hot rolled steel production increased in the first quarter of 2024 compared to the same period last year.

Increase in exports

Domestic demand for hot rolled steel dipped in March, decreasing by 11.2% y-o-y to 689,000 tonnes (t) and exports declined by 1.7% y-o-y to 530,000t. However, in March exports surged by 42.9% m-o-m compared to the previous month, largely due to a favourable exchange rate and a low base effect from poor February weather conditions impacting exports.

Domestic demand lags

While exports provided a temporary boost in March 2024, domestic demand throughout Q1 remained sluggish. Compared to the same period last year, domestic sales inched down by 1% y-o-y. Analysts suggest a combination of slow recovery in domestic demand industries and increased supply directed towards the automobile sector may be contributing to this trend.

A BF official explained the recent surge in exports. "Due to February's Lunar New Year holidays and rainy weather, they only had 11 days for shipments, leading to a backlog". However, the favourable exchange rate presented a good opportunity, and they've been actively selling overseas to clear the carried-over inventory.

Production recovers in March

Hot rolled steel production showed a positive trend in March 2024. Production reached 3.133 mnt, reflecting a 1.8% y-o-y and 5.0% m-o-m increase compared to the previous year and month, respectively. This upward trend is attributed to the recovery from last year's flooding and an increase in operating days during March.

Sales lag behind production

Despite production growth, hot rolled steel sales in the first quarter were down slightly compared to the same period last year. Total sales volume reached 3.578 mnt showing a decrease of 2.3% y-o-y. This gap reflects both 1% y-o-y decline in domestic demand to 2.171 mnt and a 7% y-o-y drop in exports reaching 1.407 mnt.

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