Asia Times - News and analysis from Korea; North and South

Korea

Steel prices rise, export restrictions imposed

SEOUL - South Korea decided on Wednesday to impose export restrictions on scrap iron and steel bars in a bid to cushion the shock of a growing shortage of raw materials.

It will also step up efforts to clamp down on speculative stockpiling of scrap iron and other raw materials amid increased shortages of supplies for steel production.

The Ministry of Commerce, Industry and Energy said it will implement restrictive measures as early as Monday after making the decision public.

The decision came after related industries suffering from a shortage of supplies called for drastic measures to prevent the problem from hurting them further.

South Korea's steel makers have been forced to repeatedly raise prices to reflect the surge in import costs, passing the financial burden to the nation's main industrial sectors, such as the auto, ship building and construction industries.

Domestic steel makers have also been in fierce competition to secure stable supplies of raw materials. Some industry watchers forecast prices will undergo a correction in July or August due to seasonal factors in China's construction sector.

The prices of steel products are forecast to rise in South Korea due to a continued upswing in the international prices of raw materials as well as a widening price gap between steel products at home and abroad, industry watchers said.

The industry experts speculated that the serious supply difficulties could further worsen as China, the United States and India seek to restrain outflows of raw materials to protect their own steel industries.

There have been claims that China is moving to ban the export of scrap iron following a recent ban on overseas shipments of coke, a key ingredient in steel making. Similarly, the United States, the world's largest exporter of scrap iron, is seeking to regulate its scrap iron exports at the recommendation of domestic consumers.

The growing scarcity of raw materials is already forcing South Korea's small- and medium-sized steel makers to suspend or reduce operations.

POSCO, South Korea's largest steel maker, and other major steel producers are expected to reduce output, starting in the second quarter, if supply problems persist.

POSCO, is also under pressure from foreign shareholders to raise steel prices, while considering the burden on local consumers.

LG Investment Securities researcher Lee Eun-young pointed out that small and mid-scale consumers are now buying few steel products because brokers are stocking up on POSCO's steel products, which are cheaper than imports.

(Asia Pulse/Yonhap)

Mar 4, 2004

No material from Asia Times Online may be republished in any form without written permission.

Privacy and Legal Policies