South Korea: Pipe makers continue to bear losses in Jan amid sluggish demand

South Korean structural pipe manufacturers are facing difficulty in avoiding losses in January due to low prices, high raw material inventories and stagnant demand.

Prices

The prices of structural tubes of 2 mm are generally in the range of 1.1 million won per tonne (t) ($918/t). However, prices vary from company to company.

The prices of hot-rolled products were slashed by 50,000 won/t in Dec'21 and Jan'22. It is challenging to achieve substantial profits with prices of hot-rolled products at around 1 million won/t and considering the manufacturing costs.

In addition, prices of hot-rolled products from China have recently dropped owing to shipments coming in over February-March, while domestic volumes have not increased much due to the impact of higher import prices and unstable export policies. Pipe companies also witnessed limited sales.

Delay in demand recovery

Owing to the low-demand season in winter, procuements are declining in anticipation of a price revision. This is leading to delay in demand recovery.

Particularly, prices of raw materials have fallen and inquiries from companies are further decreasing.

Outlook

Sales in February are expected to improve as the off-season recedes. But raw materials were purchased at high prices while there is a possibility of a shortage in domestic hot-rolled products. But the influx of raw materials from China may keep prices range-bound.

Note: This insight has been published in accordance with an article exchange agreement between SteelMint and SteelDaily.