South Korea’s Steel Inventories Increase

SHANGHAI, Nov. 24 (SMM) -- According to data released by the Korea Iron & Steel Association on November 22nd, Pohang Iron and Steel Co. Ltd (POSCO) exported 3.62 million mt of steel products in 3Q 2011, up 21.4% from 2Q, accounting for 41.7% of its output during the same period. POSCO exported 13.5 million mt of steel products in 1H 2011, and is expected to export 14.7 million mt in 2H 2011. Hyundai Steel and Dongkuk Steel’s exports of steel products also increased. However, South Korea’s steel inventories grew significantly despite increasing exports, with steel inventories reaching 1.25 million mt by the end of September, up 22% and hitting a record high, due mainly to weak domestic demand in South Korea.

Steelease believes growing steel inventories in South Korea will exert pressure on China’s exports of steel products, since the distance to Southeast Asian countries and transportation advantages make South Korea the competitor of China’s steel exporters. However, as the types of steel products from South Korea and China are different, the pressure will not be great. South Korean steel mills mainly produce higher value-added steel products, and China still lacks the production capacity of some high-end products, so any effect from growing steel inventories on China’s exports of steel products should be limited.