South Korea's steel industry is likely to have poor first quarter earnings due to soaring raw material prices, falling steel prices and growing protectionism.
Industry observers say the weak outlook for South Korea's steel industry is mainly due to soaring prices of iron ore, the raw material for steel.
During the period from January to March, the average price of iron ore rose by 13.8% to $80 from $70 in the fourth quarter of last year. The price surge was due to supply problems in Brazil and Australia, two major producers of iron ore.
Despite the soaring price of raw materials, the price of Korean carbon steel fell by 15,000 won/ton in January-March this year due to the excess supply of steel materials in China.
Increasing trade protectionism also exacerbates the operational pressure of the local steel industry in South Korea.
Last month, the European Union implemented a safeguard measure for imported steel products, including Korean products. In the same month, China decided to implement temporary anti-dumping measures on some stainless steel imports from EU, Japan, Korea and Indonesia.
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