Supply disruptions loom in Korea’s steel industry as the country’s two largest steelmakers are struggling to fully operate their plants.
Posco is still in the process of restoring its Pohang plant that was flooded by Typhoon Hinnamnor earlier this month, while labour unions at Hyundai Steel have been going on a series of strikes after negotiations failed.
The two companies dominate over 80% of Korea’s crude steel production.
The price of stainless hot-rolled steel rose 10% to 4.4 million won while the prices of steel plates, which are the main materials for shipbuilding, rose 14% in just two weeks.
Prices are expected to rise even more rapidly in coming weeks as Hyundai Steel employees are planning more strikes.
Hyundai Steel’s four labour unions went on strike for eight hours on 24-25 September. They said they will stage strikes unexpectedly until the company accepts their demands.
Hyundai Steel unions are demanding a base monthly pay raise of 165,200 won and 15% of last year’s operating profit as incentives. The unions have also requested 4 million won of bonuses, arguing that employees of Hyundai Motor, Kia and Hyundai Mobis received that amount.
Hyundai Steel is Korea’s second-largest steelmaker in Korea after Posco, producing some 20Mt of crude steel per year.
Hyundai controls some 30% of local steel plate production. In terms of the production of H-beam steel, it dominates the market with around 70% of the share.
“If Hyundai employees really go on strike, it will inevitably encourage a steeper price rise in steel products.”Lee Jae-yoon, research fellow at the Korea Institute for Industrial Economics and Trade
“As of now, Hyundai Steel is the one and only alternative for the supply of steel products amid the absence of Posco’s Pohang steel mill,” said Lee Jae-yoon, a research fellow at the Korea Institute for Industrial Economics and Trade. “If Hyundai employees really go on strike, it will inevitably encourage a steeper price rise in steel products.”
Source: Hellenic Shipping Institute