Rus-U Crisis Sparks Continued Domino Price Increases in Steel Materials

Global Steelmakers Also Raise Prices Successively
Prices of Iron Ore and Coking Coal Continue Soaring

[Asia Economy Reporter Jeong Dong-hoon] As raw material prices soar due to the war between Russia and Ukraine, a global domino effect of steel price hikes is becoming a reality. With major steelmakers rushing to raise steel prices, it is highly likely that domestic steel prices will also increase further next month.

According to the industry on the 15th, ArcelorMittal, Europe's largest steelmaker, recently raised prices of steel products such as hot-rolled coils by nearly 20%. Earlier, Baosteel increased the domestic price of hot-rolled steel by about 350 yuan (approximately 67,935 KRW) per ton this month. Hot-rolled steel refers to steel sheets that are heated at high temperatures and then pressed and stretched to reduce thickness. It is used to manufacture automotive steel sheets, steel pipes, and construction materials.

Domestic steelmakers are also following the trend of raising steel prices. POSCO raised the price of hot-rolled steel for distribution by 50,000 KRW per ton in March, and POSCO Steel Plate and Dongkuk Steel also increased the price of all cold-rolled galvanized steel sheets by 50,000 KRW per ton starting this month. Hyundai Steel likewise adjusted the supply price of steel pipe products upward by 100,000 KRW per ton from shipments this month. With raw material prices such as iron ore and coking coal skyrocketing, product price increases next month are inevitable.

According to statistics from the Ministry of Trade, Industry and Energy, as of the 14th, the price of coking coal for steelmaking stands at about 649.25 USD per ton. This is an increase of approximately 80.55% compared to 359.58 USD at the beginning of this year. Iron ore is currently priced at 144.90 USD per ton during the same period, still at a high level compared to 122.9 USD at the start of the year.

Russia and Ukraine also hold a significant share of global crude steel production, so if the war prolongs, steel prices will inevitably face continuous upward pressure. According to the World Steel Association, as of 2020, Russia and Ukraine ranked 5th and 12th respectively in global crude steel production. In terms of export volume, they ranked 2nd and 9th respectively. Their combined global market share reaches 5%.

The profit erosion in industries with high steel consumption such as automotive, shipbuilding, and construction seems unavoidable. As raw material price increases lead to higher steel product prices, the manufacturing sector is feeling the burden. The Korea Construction Material Purchasing Council, composed of purchasing managers from 30 domestic construction companies, recently delivered a statement opposing the rebar price hike to Hyundai Steel. The completed car industry, which experienced consecutive price increases for automotive steel sheets in the first and second halves of last year, is concerned about cost burdens due to additional price hikes. The shipbuilding industry also states that the price increase of shipbuilding steel plates last year, the first in four years, and further price hikes this year pose a significant burden. The shipbuilding sector estimates that the provision for construction losses due to last year’s shipbuilding steel plate price increase amounts to about 2 trillion KRW.

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