Japanese factories benefit from typhoon in South Korea

Japanese steel and special steel exports to South Korea rose 41.6% in October from September to 484,009 tons, according to new data from the Japan Iron and Steel Federation (JISF). The monthly jump compares to a tiny 1.1% year-on-year increase and coincides with the disruption to Korean steel producers and steel consumers who were hit by Typhoon Hinnamnor in early September.

The typhoon drenched much of South Korea, especially the southeast corner of the country, where POSCO was forced to halt all operations at its Pohang plants and has yet to recover all flooded facilities, according to Mysteel Global. Mini mills and another integrated steelmaker, Hyundai Steel, also suffered damage and disruptions, prompting users to seek steel overseas.

Exports of hot-rolled steel (HRC) from Japan to Korea doubled in October to 182,535 tons, although the jump in supplies was also helped by the fact that a strike at Hyundai Steel's Dangjin plant on South Korea's west coast brought production to a halt. factory hot rolling mill.

Total exports of all types of steel from Japan in October amounted to 2,479,163 tons, down 10.9% compared to the same period last year and falling for the fourth month in a row, JISF notes.

Across core products, hot-rolled steel sales fell 2.4% year-on-year to 814,946 tons, the fourth straight monthly decline, while galvanized steel sheet sales reached 162,600 tons, down 27.7% from in October last year, and is declining for the 10th month in a row. , says the JISF.

Among the main customers of Japanese steelmakers, steel exports to China - Japan's third largest steel buyer after Thailand - fell 3.1% m/m and 28% y/y, respectively, to 291,435 tons in October, reflecting the fact that demand in China was weak during the month. and prices are largely unattractive to Japanese exporters. Exports there have declined for the eighth month in a row, JISF notes.

Exports to Thailand also fell in October, falling 10.2% m/m and 29% y/y to 333,837 tons, JISF data showed. However, one-third of the total shipments consisted of hot-rolled steel – 117,532 tonnes – where tonnage was down 11.5% from September and a whopping 30.5% from October last year.

Mysteel Global noted that nearly all of these HRCs are for Japanese-invested cold-rolled and coated flat steel mills in Thailand, which supply automotive sheets to Japanese automotive plants and home appliance manufacturers in Thailand.

The Federation of Thai Industries last week announced that the country's car production jumped 10.3% year-over-year in October to 170,717 units, saying manufacturers benefited from an easing semiconductor shortage.

While this suggests that Nippon Steel and JFE Steel can expect a parallel increase in shipments from their local coil processing plants to automakers, the drop in HRC exports from Japan indicates that companies such as JFE Steel Galvanizing (Thailand) - 400,000 tons /year Hot dip galvanized and galvanized steel plant at Rayong in eastern Thailand - stockrooms are stocked with finished steel that must first be cleaned before resuming imports of backing coils from main plants in Japan.