Steel prices are on the rise amid concerns over disruptions in steel supply due to production suspension at POSCO.
POSCO explained its future steel supply plans to its distributors on Sept. 15. The steelmaker plans to produce major steel products such as thick plates and hot-rolled plates at Gwangyang Works and supply them to distributors beginning from October.
The monthly supply target for thick plates is about 40,000 tons per month. The volume falls short of the 50,000 to 60,000 tons that were normally supplied to retailers. This is because Gwangyang Works' production capacity is 2.5 million tons per year, smaller than Pohang Works' 4.5 million tons.
On the other hand, POSCO believes that Gwangyang Works will be able to replace Pohang Works in the supply of hot-rolled steel sheets.
But supply disruptions for stainless steel are expected to continue until early December when the second steel mill damaged by flooding and fire goes back to normal operations. Total production disruption volume at Pohang Works is estimated at 1.7 million tons.
As concerns about supply disruptions grow, prices of major steel products are skyrocketing. The price of hot rolled products last week was 1.1 million won per ton, up 4.8 percent from a week ago and 10 percent from the previous month. The prices of thick plates remained the same from last month, but import prices climbed 16.7 percent to 1.05 million won during the same period.
POSCO is also considering bringing major products to Korea from its overseas production subsidiaries in Indonesia, India, China and Thailand, if necessary.