Steel demand in Korea is expected to grow 12.2% YOY in 2010 on the back of recovery of automobile and shipbuilding industries.
The Korea Iron & Steel Association has said that steel demand in Korea is expected to grow by 12.2% YOY to 51.4 Million tons in 2010, as reported by
SteelGuru.
Positive projection for steel demand in Korea is actually based on high economic growth that has led to the increased usage of steel in automobile and shipbuilding industries. It is believed that soaring demand from these two industries will help the Korean steel industry to move at rapid pace. Besides, healthier demand for flat steel from local manufacturers and robust overseas sales will support growth in the steel industry.
In 2008, major Korean steel producing firms cut down their production and postponed investment plans in face of weak demand due to the global economic slowdown. The downtrend continued in 2009 and many steel firms further reduced their production levels. POSCO, the world’s fourth largest steelmaker, crude steel production volume had reached 33.1 Million tons in 2008, which further contracted to around 30 Million tons.
Apart from increase in domestic demand, the Korean steel makers will be benefited from the Chinese government industrial policy of putting cap on excessive steel supply because this restriction will reduce global gut supply.
With soaring domestic demand, the steel makers can now expect strong gains in 2010. POSCO has already announced that it will invest 10 Trillion won this year in the expansion of facilities and acquisitions whereas it invested 5 Trillion won last year (2009).
Steel prices are also expected to rise in April 2010, with the surge in iron ore and coal prices. It will also help steel makers in gaining more profits, as they will also increase prices of their products according to raw material prices.
According to a Research Analyst at
RNCOS, “The Korean steel industry has been playing an important role in the growth of the country’s economy for over three decades. The rise in steel demand and prices will help the industry to keep rolling smoothly on the growth track. However, increase in raw material prices will create some disturbance for local steelmakers in the form of price competition. In order to deal with this situation, they will have to find a method of securing raw material stably.”
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