Steel Prices in China Show Signs of Recovery
Steel prices in China have recently shown signs of recovery, heightening the expectations of Korean steel companies for price normalization.
China’s hot-rolled steel sheet prices inched up from US$451 per ton on Feb. 28 to US$454 on March 6, industry sources said on March 17. Rebar prices rose from US$417 per ton to US$424 in the same period and to US$429 on March 12.
Normally, when steel inventory increases, steel prices drop. But recently, despite a spike in steel inventory, steel prices rose on the back of growing demand for steel and a positive outlook on the steel market.
Indeed, the inventory of the five major steel products — hot-rolled steel sheets, cold-rolled steel sheets, heavy steel plates, wire rods, and rebars — increased nearly 10 percent from 17.35 million tons on Feb. 20 to 19.05 million tons at the end of February in 20 major cities in China.
Already, steel prices are rising in major markets including Europe and the United States. As China accounts for more than 50 percent of global steel production and consumption, its steel prices have a significant impact on the global market. On March 11, SteelBenchmarker, a global steel benchmark pricing system for use by steel industry participants, set the price of hot-rolled steel sheets in Western Europe at US$499 per ton, up 3.7 percent from two weeks ago. In the United States, it rose 2.5 percent to US$651 per ton over the same period.
Accordingly, Korean steelmakers are delighted as a hike in China’s steel product prices can be seen as signaling a steel price rebound in Korea. Last year, Korean steel companies suffered a deteriorating profitability because they could not raise product prices despite an increase in raw material prices, such as iron ore. They planned to normalize prices from the end of 2019 to the beginning of this year. In fact, Korean steelmakers such as POSCO and Hyundai Steel have been steadily drawing up plans to raise the prices of major products such as hot rolled steel plates and reinforcing rods by 10,000 won to 30,000 won per ton.
However, since mid-February, they hit a setback in pushing forward with their plans as the spread of the COVID-19 virus took a heavy toll on all industries. In particular, after the start of March, the peak season for steel products, retail prices of steel products went downwards once.
“A recovery in steel prices in China could be the green light for the normalization of prices in the Korean steel industry,” said an official of a Korean steel company.
Source: Business Korea