Steel Prices Rise Following Semiconductors... New Car Price Increase Inevitable

Export vehicles are waiting to be loaded at Pyeongtaek Port in Gyeonggi Province. (File photo)

[Asia Economy Reporter Changhwan Lee] The completed car industry, struggling with a shortage of automotive semiconductors, is facing a double burden as it is hit by the adverse factor of rising steel prices. Following the increase in semiconductor prices, the price of steel, a major material for automobiles, has also risen, leading to forecasts that new car prices will increase further in the second half of the year.

According to the steel industry on the 21st, the market distribution price of hot-rolled steel sheets, a basic steel material used as a major material for automobiles, has risen from 700,000 KRW per ton at the end of last year to 1,200,000 KRW recently. The price of iron ore, the raw material, surged internationally, causing steel distribution prices to increase as well.

As a result, steel pipe companies that process steel sheets to manufacture automotive steel pipes and supply them to automobile companies are reportedly demanding price increases from the completed car industry recently.

The Drawn Steel Pipe Association, composed of drawn steel pipe companies mainly used for fuel pipes, held a resolution rally on the 13th at a university in Gyeonggi Province, urging Hyundai Motor Company and domestic completed car companies and parts companies to raise supply prices. It is also known that Hyundai Motor Group is internally discussing countermeasures regarding the demand for steel price increases.

Not only steel prices but also the increase in automotive semiconductor prices is a burden for car companies. This year, the price of automotive semiconductors has risen by more than 20% compared to the previous year, and recently, they are reportedly being traded with premiums added on top.

The rise in major raw material prices is ultimately expected to lead to an increase in car prices. According to the US market research firm JD Power, the average selling price of new car models sold in the US last month was $37,572, up 7% compared to a year ago. This is because semiconductor prices have been reflected in new car prices.

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