South Korea's steel giants boost domestic sales of HR steel in Jan'24

South Korea's leading blast furnace steel producers, POSCO and Hyundai Steel, witnessed their production and sales of hot rolled (HR) steel decline in January 2024 compared to the previous month. However, the companies managed to increase the proportion of domestic sales, indicating a shift in focus towards the local market.

Production dips, but domestic demand surges:

• Hot rolled production at both companies fell by 100,000 tonnes (t) m-o-m to 930,000 t in January.
  
  
• Sales volume also dropped by 45,000 t m-o-m to 970,000 tons.
  
  
• Despite the decrease, domestic demand soared by 65,000 t m-o-m to 590,000 t, accounting for 61% of total sales.
  
  

Factors driving domestic focus:

• Increased demand for downstream processes like cold galvanized materials is believed to be fueling domestic consumption.
  
  
• Rising unit prices of Japanese hot rolled steel (around $600/t) incentivized domestic sales.
  
  

Export challenges:

• Exports saw a significant decline, particularly to India and Europe.
  
  
• Shipping delays due to rerouting around the Suez Canal after attacks by Yemen's Houthis impacted European deliveries.
  
  

Overall Performance:

• Despite January's decline, 2023 saw a positive year for both companies.
  
  
• External sales of hot rolled steel increased by 8.3% y-o-y compared to 2022, reaching 11.3 million tonnes (mnt).
  
  
• Production also grew by 9.2% y-o-y in 2023, reaching 11.4 mnt.
  
  

Outlook:

The shift towards domestic sales suggests a strategic response to market conditions. However, future performance will depend on factors like global steel prices, domestic demand trends, and potential disruptions in international shipping.

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