South Korea: POSCO plans to reduce 300 series stainless steel prices for August

POSCO plans to cut prices of stainless steel 300 series by KRW 500,000/t ($382/t) for August 2022 owing to drop in nickel prices, as per a SteelDaily report. In July, LME nickel prices plummeted to $19,000/t due to US interest rate hikes, China lockdown and concerns surrounding global economic downturn.

POSCO's 300 series stainless steel price cut of KRW 500,000/t ($382/t) is a price realisation measure following the KRW 100,000/t ($76) cut in 300 series stainless steel prices in July. The current July sales price, which has already been established in the stainless steel distribution market, can be interpreted as a pre-reflection of a KRW 500,000/t cut in August.

Sources in the medium and large retail industry informed that the August cut has already been reflected in the market price, and that the purchase price has come down to a level where there is almost no profit considering the transportation and processing costs compared to the currently established selling price.

The stainless steel distribution industry is already losing sales in July at a marginal cost.

Coil centres handling domestic products, agencies, and importers all faced sales below cost in July.

Although the July selling price of importers varies depending on the time of stocking by each company, they are being sold at a price that loses up to KRW 300,000/t ($228) to KRW 800,000/t ($610/t) compared to the cost of imports.

As the lowest price in the third quarter affects the number of imports in September, the import industry's loss of sales is expected to be unavoidable until September. Therefore, it is highly likely that the currently established selling price of imported goods will continue to rise and fall at a similar level until September.

As of July, the average selling price of 304 stainless steel imported hot-rolled products was in the range of KRW 3.7-3.8 million/t ($2,820-$2,900/t), and the average cold-rolled 304 stainless steel imported average selling price was KRW 3.9 million/t ($2,976/t). The import cost of cold-rolled products currently in stock is at least KRW 4.1 million/t ($3,129/t).

The following is the selling unit price of medium and large retailers handling domestic products:

In May, the base selling price of genuine 304 hot-rolled was KRW 4.8 million/t ($3,663/t), but in mid-June, POSCO lowered the official price by KRW 100,000/t ($76) for July orders.

In July, the price of genuine POSCO 304 hot-rolled products was superficially at the level of KRW 4.2 million/t. Similarly, in mid-July, POSCO announced a price cut of KRW 500,000/t ($381/t) for August orders. The market price has already been discounted by KRW 500,000/t ($381/t).

The timing may be a bit confusing as POSCO's price announcement standard changed from February of this year based on order input, but it is understandable enough considering the fact that the price cut is reflected in advance in a downtrend as a result.

In July, major POSCO coil centers sold 304 hot-rolled products at KRW 4.2 million/t ($3,205/t) and cold-rolled 304 products at KRW 4.3 million/t($3,275/t). It is highly likely that this price will be maintained in August.

Currently the global stainless steel industry is facing a downturn. It is expected that the situation will remain largely same in the near future.

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