South
Korea is currently the biggest export destination of Chinese steel. Parallel to increase in
China's steel exports in 2006, S.
Korea's imports from
China have also increased by a large margin.
During January-May, S.
Korea's total steel import from
China reached 3.17 million tons while it was 2.67 million tons during the same period of last year. Local S. Korean mills are dissatisfied due to the rapid increase of imports from
China. Recently, S. Korean government warned
China to control the quantity of its steel exports, and showed their intention of possible antidumping measures. Meanwhile, July and August are the traditional dead season for S. Korean steel market. Now,
China's export price is close to, and even higher than, S. Korean local market price. Therefore
China is losing the price advantage and facing more difficulties on exporting steel to S.
Korea.
Currently, major steel products exported from
China to S.
Korea are
rebar,
wire rod,
plate, and hot rolled sheet and coil. Their export quantity is more than two thirds of the total steel imported by S.
Korea. In the first half of 2006,
China's export price kept increasing due to domestic market boom. This trend is still going on. At present, hot rolled coil quotations with August delivery are around $550-580/ton CFR. Among them, the quotations for
pipe rolling hot rolled coils are around $575/ton CFR, up $30-40/ton month on month.
Plate quotations have also increased to $600-648/ton CFR level. Besides these, other steel products' prices have increased by different margins. Although S. Korean POSCO increased its ex-factory prices in July, the mill's cold rolled coil price is still beneath that of imported from
China.
South
Korea has been the leading country regarding steel
consumption per capita for the last 5 years. The
consumption per capita in 2006 is estimated to be 1,010 kg while it was 969 kg last year. This is mainly caused by the fast development of S. Korean
shipbuilding, electronic and automobile industries.
Korea's huge local demand promotes its steel supply from import. Last year, S.
Korea imported 8.5 million tons of steel in total, and it plans to import 8.3 million tons this year. As S.
Korea's neighbor and the biggest steel making country,
China exported approximately 6.8 million tons to S.
Korea in 2005, and the figure is estimated to be 7.5 million tons in 2006, almost 90 percent of S.
Korea's total import.
In the second half of 2006, S.
Korea's local demand for
construction steel such as reinforced bar will decrease due to the delay of
construction projects, similar to
China. Influenced by high oil price, the outlook for automobile
production and sales is not very optimistic, either. These factors will cause negative influences on
China's exports to S.
Korea.
It is logical to forecast that
China's steel exports will not be as good as that in the first half of the year. Particularly, once the antidumping investigation on Chinese steel is launched by S. Korean government, Chinese export will inevitably go down.