South Korea: HR steel production, sales decline at POSCO and Hyundai Steel

South Korean steel giants, POSCO and Hyundai Steel, saw decrease in Hot rolled (HR) steel production and sales in May 2024 as highlighted in a recent industry report. This decline is attributed to a combination of facility maintenance and a shrinking domestic market.

Key findings:

Production: Hot rolled steel production for external sales at both companies in May was 845,000 tonnes (t), a decrease of 8.6% compared to the previous month. This marks the first time since September 2023 that production fell below 900,000 t.

Sales: Sales volume of hot rolled steel also declined in May, with both companies recording 875,000 t for external sales, representing a 3.8% decrease from the previous month. This is significantly lower compared to the 1 million tonnes (mnt) recorded in December 2023.

Breakdown by sales type: Domestic demand saw a steeper decline of 6.1% compared to the previous month, reaching 535,000 t. Exports remained flat at 340,000 t, accounting for 39% of total sales. Domestic sales currently hold the majority share at 61%.

Causes: Facility maintenance at POSCO and Hyundai Steel during April and May is acknowledged as a contributing factor. However, a decline in orders from domestic companies due to increased cost burdens is also suspected as a contributing factor to the shrinking market size for hot rolled steel.

Cumulative performance: The negative trend extends to year-to-date figures. Cumulative production of hot rolled steel for external sales from January to May 2024 decreased by 5.7% compared to the same period in 2023, reaching 4.52 mnt. Sales volume for the same period also declined by 4.8%, totalling 4.535 mnt.

Outlook:

The hot rolled steel market in Korea appears to be experiencing a contraction. While facility maintenance played a role in the recent decline, the decrease in domestic demand due to rising costs is a more concerning long-term trend.

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