Steel­mak­ers raise prices amid higher ma­te­rial costs

The Korea Times - - BUSINESS -

Korean steel­mak­ers are rais­ing the prices of their prod­ucts to re­flect in­creased costs of raw ma­te­ri­als, in­dus­try sources said Mon­day, though the price hikes are likely to be lower than ex­pected.

POSCO re­cently agreed with a lo­cal car­maker to raise the prices of its au­to­mo­bile steel sheets, ac­cord­ing to the sources.

This is the first time since 2017 that POSCO has raised prices.

POSCO also in­creased the prices of its cold rolled steel, picked oiled steel and gal­va­nized steel in re­cent months.

“We can’t con­firm the deal with our cus­tomer, but it’s true that the com­pany has been try­ing to raise the prices of our prod­ucts due to in­creased raw ma­te­rial costs,” a POSCO spokesper­son said.

The price of iron ore jumped from $72.63 per ton in Jan­uary to $124.05 in July — a more than 70 per­cent in­crease — be­fore de­creas­ing again.

This hike in raw ma­te­ri­als ate into steel­mak­ers’ bot­tom lines in the first half of the year.

POSCO saw its op­er­at­ing profit drop 15.3 per­cent year-on-year to 1.5 tril­lion won ($1.2 bil­lion) in the first half, while No. 2 player Hyundai Steel posted an op­er­at­ing profit of 445 bil­lion won, down 33.5 per­cent from a year ago.

Ja­pan’s Nip­pon Steel re­cently inked a deal with Toy­ota Mo­tor to raise the price of steel sheets for au­to­mo­biles, and in­dus­try in­sid­ers have said lo­cal steel­mak­ers are in talks with their cus­tomers to raise steel prices.

“We are still ne­go­ti­at­ing with our cus­tomers over au­to­mo­bile sheets prices,” a Hyundai Steel spokesper­son said.

“If POSCO and oth­ers have raised their prod­uct prices, then it will serve as a good rea­son for us to push for a price hike.”

Ko­rea’s ma­jor steel­mak­ers are also push­ing to raise the prices of steel prod­ucts used in the ship­build­ing in­dus­try, though ne­go­ti­a­tions have not been easy.

Lo­cal ship­builders have been de­mand­ing a freeze in prices of thick steel plates in the sec­ond half so that they can stay com­pet­i­tive amid the global eco­nomic slow­down.

In­dus­try ob­servers said that steel­mak­ers will even­tu­ally raise the prices of steel plates for ship­build­ing to re­coup their losses.

“The re­cent drop in iron prices may weaken steel­mak­ers’ calls for a price hike, but since there are no al­ter­na­tives, steel­mak­ers are in a bet­ter po­si­tion (in price ne­go­ti­a­tions),” said Jung Ha-neul, an an­a­lyst at Ko­rea In­vest­ment & Se­cu­ri­ties.

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