South Korea: Price negotiation of CR steel between steelmakers and home appliance industry

There is a 'tight tug of war' in the second quarter between South Korean home appliance and steel manufacturers, negotiating the prices of cold-rolled (CR) steel.

While negotiations on the prices of cold-rolled galvanised material in the second quarter between the home appliance industry and domestic steelmakers are in progress, the negotiations are expected to be completed within Mar'22.

Two global home appliance companies, including Samsung Electronics and LG Electronics, are currently negotiating prices in the second quarter with the domestic steel manufacturing industry that supplies cold-rolled plating materials.

The steel mills have requested a price increase of KRW 50,000/tonne (t) ($41/t), while the home appliance industry is demanding an increase of KRW 20,000-40,000/t ($16-33/t) or a stay.

Home appliance industry grapple with material shortage, soaring prices

Meanwhile, the home appliance industry in the first half of this year is facing shortage of raw materials and parts, and global demand uncertainty is growing.

In particular, the burden on the home appliance industry is increasing as global freight rates are hitting all-time highs. With the increase in raw material prices and logistics costs (sea transportation, air transportation), profitability management of companies is emerging as a challenge.

Steel mills focuses on price negotiation

On the other hand, the steel industry is paying attention to the results of the price negotiations in the second quarter as it has consistently been raising prices since February owing to the rising prices of coking coal and international steel materials.

POSCO plans to negotiate prices with home appliance manufacturers in the second quarter, and negotiate the prices of cold-rolled steel for home appliances in consideration of raw material prices, steel supply and demand.

Negotiations on coloured steel sheets for home appliances have not started as the price negotiations for cold-rolled steel sheets for home appliances are underway in the second quarter.

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