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.