Domestic Steel Demand in Korea to Fall Below 50 Million Tons This Year... Lowest Since Financial Crisis Expected

[Image source=Yonhap News]

[Asia Economy Reporter Hwang Yoon-joo] Domestic steel demand this year is expected to record the lowest level since the 2009 financial crisis.

According to the Korea Iron & Steel Association on the 17th, domestic steel demand this year is estimated to be in the 48 million ton range, down about 8% from 53.2 million tons last year, as major demand industries such as manufacturing and construction were directly hit by the COVID-19 pandemic.

Domestic steel demand first exceeded 50 million tons in 2007, reached 58.6 million tons in 2008, but fell to 45.4 million tons in 2009 due to the financial crisis. However, it increased again from 2010 and remained above 50 million tons for 10 years until last year.

Gong Moon-gi, a research fellow at POSCO Research Institute, said, "Demand for plate products and bar-shaped steel products sharply decreased due to the simultaneous downturn in the automobile, shipbuilding, and construction industries," adding, "A short-term recovery is expected next year due to economic stimulus measures such as the Korean New Deal policy, but it is expected to remain at around 50 million tons annually."

Since the shipbuilding industry accounts for a relatively large proportion of domestic steel demand, it is analyzed that overall steel demand will find it difficult to recover to pre-COVID-19 levels.

Annual exports this year are also expected to fall below 30 million tons for the first time in seven years.

Korea's steel exports (hot-rolled steel sheets, cold-rolled steel sheets, heavy plates, etc.) have steadily maintained 30 million tons annually from 2014 to last year, but this year are expected to be around 28 to 29 million tons. Steel export value through October this year decreased by 16% compared to the same period last year.

Korea's major export destinations are ASEAN (22%) in first place, followed by China (19%), Japan (11%), and the EU (10%). Exports to ASEAN have been around 6 million tons in recent years and are expected to maintain that level this year as well.

In particular, China played a significant role in maintaining Korea's steel export volume this year. Over the past 10 years, Korea has maintained steel exports to China in the 4 million ton range, but exports reached 4.61 million tons through October this year, a 43% increase compared to last year.

This is analyzed to be due to increased demand from the Chinese government's economic stimulus measures, but supply within China has not kept pace due to rationalization of facilities in recent years, leading to increased imports.

Exports to Japan are expected to decrease by about 20% compared to last year due to a sharp drop in demand. Exports to the EU, which had been on the rise over the past five years, have been declining since 2019 following the EU's safeguard measures after peaking at 3.5 million tons in 2018. Exports to the United States have also drastically shrunk to the 2 million ton level due to the operation of steel quotas under Section 232 of the Trade Expansion Act in 2018.

This content was produced with the assistance of AI translation services.