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    Korea
     Mar 15, 2005
S Korean car makers hurt by rising steel prices

SEOUL - South Korean steel makers are poised to raise prices of their products, dealing an additional blow to the local car industry already suffering from a strong currency, industry sources said Monday.

POSCO, the nation's largest steel maker, is set to raise its cold-rolled steel sheets by 8.6% from April 1, with other steel makers reported to follow suit soon.

The envisioned increase is expected to cost Hyundai Motor Co and its affiliate Kia Motors Corp more than 200 billion won (US$ 199.8 million) in additional expenses, according to the sources.

The two car makers, affiliated with Hyundai Motor Group, account for 75% of domestic car production.

"Though the strengthening won can be dealt with by diversifying export destinations, rising steel prices are sure to affect the production cost of automobiles, eroding their earnings," said a car industry official on condition of anonymity.

The rise in steel prices is also expected to force car makers to lift their export prices, which may make their products less appealing in global market.

Hyundai Motor raised its export prices in January by $50-500, and intends to further hike prices as a result of the increase in steel prices.

Domestic steel makers say they have no choice but to jack up product prices owing to a surge in import prices of ore.

The won's sharp rise against the greenback is feared to hurt South Korean exports by lowering their price competitiveness overseas. The Korean currency has already risen more than 3% against the dollar this year.

(Asia Pulse/Yonhap)

 

 
 

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