Steel prices in China show signs of recovery

Steel prices in China have recently shown signs of recovery, which strengthens the expectations of Korean steel companies for a normalization in prices.

Hot rolled steel sheet prices in China rose from $ 451 per tonne on February 28 to $ 454 on March 6, according to industry sources on March 17. Rebar prices rose from $ 417 per tonne to $ 424 in the same period to the United States. $ 429 on March 12.

Typically, as steel inventories increase, steel prices fall. But recently, despite a sharp jump in steel inventories, steel prices have risen amid growing demand for steel and a positive outlook on the steel market.

Indeed, inventories of the five main steel products - hot rolled steel sheets, cold rolled steel sheets, heavy steel sheets, wire rods and rebar - increased by almost 10 percent from 17.35 million tonnes on February 20 to 19.05 million tonnes per year. End of February in 20 major cities in China.

Already, steel prices are rising in major markets including Europe and the United States. With China accounting for over 50 percent of global steel production and consumption, steel prices have a significant impact on the global market. On March 11, SteelBenchmarker, a global steel pricing system for the steel industry, set the price of hot rolled steel sheet in Western Europe at $ 499 per tonne, up 3.7 percent from two weeks ago. In the United States, it rose 2.5 percent to US $ 651 per tonne over the same period.

Accordingly, Korean steelmakers are ecstatic as the rise in steel prices in China can be seen as a signal for a recovery in Korean steel prices. Last year, Korean steel companies were hit by worsening margins as they were unable to raise product prices despite rising prices for raw materials such as iron ore. They planned to normalize prices from late 2019 to early this year. In fact, Korean steelmakers such as POSCO and Hyundai Steel are steadily pursuing plans to raise prices for key products such as hot rolled steel and rebar by 10,000 won to 30,000 won per tonne.

Since mid-February, however, they have failed in their plans as the spread of the COVID-19 virus has taken a heavy toll on all industries. In particular, after the beginning of March, the peak season for metal products, retail prices for metal products went down once.

“The rebound in steel prices in China could be a green light for price normalization in the Korean steel industry,” said a spokesman for a Korean steel company.