South Korean producers of hot rolled coils (HRC) are reducing their price discounts, and so distribution market prices of HRC are expected to increase accordingly.
South Korean steelmaker Dongbu Steel has recently notified customers of its plan to decrease its price discount on HRC by KRW 20,000/mt this month citing the heavy burden from surging production costs. An official at Dongbu Steel stated that the company has tried to minimize the reduction of its price discount, even though it needs to reduce the discount more in consideration of the increasing cost burden. The company is reportedly considering adjusting the price discount again later after taking a look at the overall market conditions.
Another domestic steel producer Hyundai Steel is expected to make its decision soon to reduce its price discount by KRW 50,000/mt in supplying its HRC to the distribution market.
South Korean steel giant POSCO is also preparing to urgently adjust its price discount in sales of HRC, as the company finds it difficult to overcome the current crisis by means of cost reduction. It is noteworthy that POSCO's HRC price adjustment could lead to an increase in the prices for other steel products including cold rolled steel sheets and steel pipes.
South Korean producers of HRC, who failed to reduce their price discount in July due to the strong resistance from consumers, are eager to make some improvement in their profitability this time, as they face a heavier burden from surging costs.
Meanwhile, Chinese HRC producers have recently announced price hikes for September, but there is a possibility they will maintain their policy to export products at low prices, as demand for HRC in the Chinese domestic market is still weak.