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Kallanish Kallanish

Knowledge matters Knowledge matters

April, 7th 2020

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APR 12
11:02

Construction drives slow Korean steel recovery: Posri

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Korea’s steel production could gain 2.5% to 76 million tonnes in 2016, despite a minimal increase in demand, according to the Posco Research Institute (Posri). Better exports and declining imports should improve the position of domestic producers, it adds.

Korean steel demand is expected to grow just 0.6% to just under 56mt in 2016 due to higher construction investment, Posri says. Long product sales are expected to grow 0.6% to 23mt, while flats sales are to grow 1% to 28mt, Kallanish notes.

Key to demand growth will be a 2% increase in construction investment, although commercial real estate investment is expected to fall behind residential. Shipbuilding construction is also expected to recover. Automotive output however will remain essentially flat as growing exports just balance out falling domestic sales.

Local producers will benefit from a -2.1% fall in steel imports to 21.6mt this year. In total, flat product output is expected to grow 3.8% to 48mt on strong export growth. Long steel output will also be up 1.9% to 20.3mt.

South Korean steel exports should gain around 3.1% in 2016 to 32.5mt, Posri says. Flat products will lead volumes, surging 5% to 26mt. Longs exports will also be up 2.1% to 2.9mt, although pipe exports are likely to decline, it believes.