After Hyundai, Dongkuk, Daehan and Hankook Distribution halted shipments, there was an urgent need for price normalization in the markets. Boycotts of below-cost selling prices, higher scrap metal prices and electricity tariff surcharges are adding to the financial burden on companies. In addition, Dongkuk Steel's plans to close its Incheon plant in July also stands out as an influential development in the sector.
Dongkuk Steel temporarily halted rebar shipments. This decision is explained as an emergency measure ahead of the suspension of rebar equipment at the Incheon plant in July and August. The company will completely suspend rebar shipments to the distribution market from June 14-22. Daehan Steel has also announced that it will suspend shipments during the same period, while Korea Steel is expected to join the move. Hyundai Steel, on the other hand, has suspended shipments of SD400 grade steel since last month.
The decision was taken as market prices have recently fallen further despite a massive reduction of up to 50%. Dongkuk Steel officials stated, "We stopped production at the Incheon plant for a month in July-August, but the market price continued to fall. We suspended shipments as we will not accept prices below costs."
“We may also consider extending the suspension period after June 22 depending on market conditions,” the Dongkuk Steel official noted, adding that the cost of rebar production in June increased by KRW 30,000 (EUR 19.02) compared to the lowest distribution price of KRW 650,000 (EUR4 11.10) per ton in March. The increase was explained as KRW 10,000 (EUR 6.34) for scrap steel and KRW 20,000 (EUR 12.68) for the electricity tariff surcharge.
Normal shipments are planned to continue in line with quantities on site and actual demand. The measure is intended to limit the amount of redistribution to prevent the price of the reinforcement from falling due to ‘selling’ at different distribution stages.
Dongkuk Steel will completely suspend ribbed rebar production at its Incheon plant from July 22 to August 15. It is not yet clear how this decision will affect the market. It is speculated that this suspension during the off-season may lead to a further decline in demand.
On the other hand, rebar prices increased to KRW 750,000 (EUR 475.50) per ton from KRW 690,000 (EUR 437.46) per ton in April after Hyundai Steel suspended rebar production at its Incheon plant for the most part, before gradually declining.
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