Pressed by an increase in scrap metal prices and a decline in productivity, major Korean steelmakers have decided to raise the price of steel bars.

The move is expected to face industry resistance as it comes amid sluggish market conditions.

Hyundai Steel and Dongkuk Steel, the nation’s second and third-largest steel companies respectively, are to raise the price 2.7% from the current 720000 won ($645) to 740000 won.

Together, these two steel companies produce about half of the domestic steel bar market, according to the Korea Iron & Steel Association.

Also, the government’s recent electricity saving campaigns have dented general productivity, which eventually led to the price increase, said a representative of Hyundai Steel.

The country’s largest steelmaker POSCO, however, appeared to be more cautious about raising prices. “Though we recently increased the purchasing price of scrap metal, this does not mean that we are to immediately raise the market price of our steel products,” said an official of POSCO.

The largest obstacle for the steelmakers is the backlash from their key consumers, especially the domestic construction industry, which has steadily been demanding a price reduction on steel bars and other metal-based raw materials.

Source: Daily ‘The Korea Herald’, Seoul; 16 Aug 2013