Korea’s Steel Market · Recent trends show Korea’s steel making capacity has remained at stable...
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Korea Iron and Steel Association 88 th Session of the OECD Steel Committee 19-20. Mar. 2020 Paris. OECD Headquarter Korea’s Steel Market Recent Trends and Outlook
Transcript of Korea’s Steel Market · Recent trends show Korea’s steel making capacity has remained at stable...
Korea Iron and Steel Association
88th Session of the OECD Steel Committee19-20. Mar. 2020Paris. OECD Headquarter
Korea’s Steel MarketRecent Trends and Outlook
CONTENTS
02. Steel making capacity development
06. Domestic consumption
04. Domestic supply and demand
01. General economic outlook
05. Export and import
03. New challenges of the industruies
07. Trade remedy actions
Executive summary
● Steel export decreased by 0.2% in 2019 compared to the previous year and likely to maintain in 2020 at around 30 million MT.
● Steel imports reached 16.8 million MT by y-o-y 9% increase in 2019.
● Long product Imports have significantly increased by y-o-y 12.9%, and China occupied 50.6% of the volume
Steel trades
Domestic supply and demand
● Steel consumption in 2019 slightly increased compared to 2018 but failed to recover at the level of 2016. Korea’s steel demand is expected to decrease 1.9% - 3.7% in 2020 due to a slump in steel consuming industries
Steel making capacity
● Recent trends show Korea’s steel making capacity has remained at stable level for the past 5 years. Particularly, It even decreased by 600 thousand MT in 2018 due to exit of EAF facilities
Trade remedies on steel products
● Global steel industries are facing the era of trade remedies. 31.7% of trade remedies from 1995 to 2018 were on base metals & articles according to WTO.
● Korea, on the other hand, has applied only for 6 AD on steel imports.
01General economic outlook
01. General economic outlook
Overview
● Korea’s GDP has maintained a stable level around 2% - 3% growth for the past 10 years
● Bank of Korea has expected increase by over 2% in 2019, but is keeping a careful watch oneconomic uncertainties sparked by COVID-19 outbreak
2017 2018 2019e2020 (e)
2021(e)1H 2H TOTAL
GDP 3.2 2.7 2.0 2.2 2.3 2.3 2.4
Private Consumption 2.6 2.8 1.9 1.9 2.2 2.1 2.3
Equipment Investment 14.6 -2.4 -7.8 5.7 4.2 4.9 5.2
Construction Investment 7.6 -4.3 -4.3 -3.6 -1.2 -2.3 -0.9
Exports 3.8 3.3 -0.4 2.3 2.1 2.2 2.4
Imports 7.4 1.6 -1.6 2.4 2.3 2.4 2.9
3.7
2.4
3.2 3.22.8 2.9
3.2
2.7
2.02.3 2.4
0
1
2
3
4
2011 2012 2013 2014 2015 2016 2017 2018 2019E 2020E 2021E
01. General economic outlook
Productions and business sentiment
● Korea’s industrial production has constantly increased by y-o-y 0.4% during 2019 but the growth is slowing down
● BSI index has shown a negative record of steel sectors below the manufacturing industries
80
90
100
110
-1
1.5
4
6.5
9
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
y-o-y Industrial Production
* Source : Kostat * Source : MOTIE, KIET
(2015=100.0) (%)
105100
90 91 9084 81
91 88 84
107
99
9195 93
87 86 87 87 88
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Steel Manufacturing Ind.
Industrial production BSI index
02Steel making capacity development
02. Steel making capacity development
Capacity development over time
● Global steel making capacity has rapidly increased by 16.2% over the decade compared to 2009
● China occupies about 48.8% of global steelmaking capacity and Korea only about 3.5%
● Korea’s capacity has rather decreased about 600 thousand tons in 2018, and maintained the same level in 2019
63.2 81.7 82.2 82.2 81.6 81.6
2,033.8
2,376.9 2,368.3 2,351.6 2,328.4 2,362.5
978.5
1,215.0 1,192.9 1,164.5 1,128.0 1,152.2
0
200
400
600
800
1,000
0
500
1,000
1,500
2,000
2,500
2009 2015 2016 2017 2018 2019e
Korea World China
(million MT) (million MT)
* Source : OECD (Mar. 2020)
03New Challenges of the industries
03. New challenges of the industries
POSCO the Lighthouse Factory
● World Economic Forum has appointed POSCO smart factory as Global Lighthouse Factory in 2019. It was the first official recognition as a Korean iron and steel company.
● POSCO is one of the front-runners dare to apply new technologies including big data analysis to steelmaking proceses, and PosFrame is the world’s first smart factory platform designated for continuous steelmaking process.
● POSCO has completed more than 320 projects to establish smart factories from 2016 to 2019 and was able to cut cost about 2,520 hundred million KRW
Smart steelmaking and How PosFrame works
* Source : POSCO Newsroom
04Domestic supply and demand
04. Domestic supply and demand
(million MT)
(△4.6%)
27.7 28.3 28.2 26.8 26.9
22.8 23.1 23.3 21.6 20.9
55.8 57.1 56.3 53.7 53.2
0
20
40
60
2015 2016 2017 2018 2019
Flat Long Pipe Total
(△1.3%) (△0.9%)
(million MT)
25
35
45
55
65
Steel Consumption
46.6 46.4 47.2 45.9 46.1
19.9 20.1 21.2 21.5 20.3
74.2 74.3 77.1 75.2 73.6
0
20
40
60
80
100
2015 2016 2017 2018 2019
Flat Long Pipe Total
(million MT)
(△2.4%)(3.7%)
0
20
40
60
80
100
(million MT)
(△2.2%)
Steel Production
* Source : Korea Iron & Steel Association
05Exports and imports
05. Exports and imports
3,023
51
813 4
3,309
264
2,223
42
2,047
52
470 6
200 516
(Thousand MT)
4,098
8,491
24.8 24.4 23.6 23.3 24.0
2.9 2.9 2.9 3.2 3.1
31.6 31.0 31.7 30.4 30.4
2015 2016 2017 2018 2019
Flat
Long
Pipe
Others
Total
(million MT)
11.8 12.8 11.0 8.6 9.3
5.7 5.95.0
3.3 3.8
3.8 4.33.2
2.83.1
22.123.7
19.7
15.416.8
2015 2016 2017 2018 2019
Others
Pipe
Long
Flat
Total
(million MT)
* Source : Korea Iron & Steel Association
3,901
5,460
Exports by products category Imports by products category
Exports and imports by countries in 2019
6,628
920
05. Exports and imports
Continuous import penetration of stainless steel products
● Korea’s import penetration rate is relatively higher than other major steel producing countries with highest record on STS above of 220% in 2019.
● STS flat products(HR·CR) imports from Indonesia rapidly increased in 2019 and particularly STSHR was even higher than that of China
● Import pentetration rate by country(2018, Worldsteel) : US 31.8%, Japan 9.2%, Korea 27.8%
0 1.2 0
148.7219.8
332.3 320.4 349299.5
188.7
2015 2016 2017 2018 2019
Indonesia China
1.1 0.9 1 27.498.9
199.8257.8 260.4 264.2 246.6
2015 2016 2017 2018 2019
Indonesia China
(1,000 MT)
(1,000 MT)
(%)
31.5
59.8
23.716.1
69.9
19.611.5
16.3
47.239.8
7.3
21.332.1
40.9
229.9
Korea’s Steel Import penetration in 2019
(Import / Domestic demand)
Korea’s STS HR import(2015-2019)
Korea’s STS CR import(2015-2019)
* Source : Korea Iron & Steel Association
06Domestic consumption
06. Domestic consumption
Construction
● Construction order amount slightly rebounded in 2019 due to government temporary stimuluspackage on residential & public sectors but continulusly keep going down since 2017
● Construction investment focused on residential sectors is likely to maintain downtrend
128120 119
103111
10291
107
158165
161155
166
140
(Unit : trillion KRW)
* Source : CAK* Source : BOK
Construction order amount Construction investment by type
(Unit: y-o-y, %)
Residential
CivilNon residential
Construction investment forecast
-4.3 -4.3
-2.3-0.9
2019 2019 2020 2021e
* Source : BOK
06. Domestic consumption
Automobile
● Korea’s auto mobile production has slightly decrease in 2019 due to domestic consumption decline and overheated competition sparked by trade tensions between G2
● Slight improvement is expected in 2020 but less likely to recover at the level of 2018 due toglobal demand decline
● Global demand (%, y-o-y) : (2017) 2.3%, (2018) -0.8%, (2019) -3.3%, (2020f) 0.9%, (2021f) 3.3%
* Source : Korea Automobile Association & POSRI
(10,000 units)
423 411 403 395 400
160 156 155 154151
262 253 245 240 246
2016 2017 2018 2019 2020e
Production Demand Export
109
65
25
136
17
North America Europe
Middle East South America
Africa Oceania
(10,000 units)
Total 240
* Source : Korea Automobile Association
Korea’s automobile supply & demand Export destinations in 2019
06. Domestic consumption
Shipbuilding
● Korea occupied about 37% out of total world orders, and 29% of world deliveries in 2019
● Korea’s shipbuilding orders rapidly decreased by 28.8% last year due to weak global economic recovery and deterioration of global trade volume
● Orders and deliveries are expected to recover continuously mainly in LNG shipbuilding industry
* Source : Clarkson
12.7 12.4
10.6
7.7
9.5
9.5
10.9
2.2
7.6
13.2
9.4
10.5
2015 2016 2017 2018 2019 2020e
Shipbuilding delieveries
New Order
(Unit : million CGT)(unit : %)
Korea
(37.2)
China
(33.6)Japan
(13.0)
EU
(13.8)Other
(2.4)
New Order
World25.3 mil
CGT
Korea
(29.0)
China
(33.8)
Japan
(24.7)
EU
(7.9)
Other
(4.6)
Delivery
World32.8 mil
CGT
Order and delivery by country in 2019 Order and delivery amount
07Trade remedy actions
07. Trade remedy actions
Trade remedies on iron & steel products
● Iron & steel industries have been the main target of global trade remedy from 1995 to 2018based on 2,094 cases out of 6,613 were on Iron & steel products
● Korea, on the other hand, has initiated only 6 cases of AD on steel products since 2004
6 ADs
0
100
200
300
400
1995 2000 2005 2010 2015 2018
Total Metal & Steel
AD+CVD+SG
35%(71)
41%(123)
36%(122)
38%(156)
40%(121)
49%(137)
46%(159
) 42%(112)
Asian Economic crisis(1996~2002)
Long term economic boom(2003~2007)China Boom
Economic Downturn(2008~2016)
China shock &global financial crisis
China Restructuring (2016~)
US – CHN Trade War
* Source : WTO
Global trade remedy from 1995 to 2018 Korea’s remedy action on steel imports
Product Country Period
H beam CHN5 yrs
(Jul. 2015 – Jul. 2020)
STS Bar
JPN, IND, ESP14 yrs
(Jul. 2004 – Jun. 2020)
TAW, ITA5 yrs
(May. 2019 – May. 2024)
STS Plate JPN8 yrs
(Feb. 2011 – Feb. 2019)
Ferrosilico manganese
VNM, IND, UKR5 yrs
(Nov. 2017 – Nov. 2022)
Zinc coated Wire
CHN5 yrs
(Aug. 2018 – Aug. 2023)
THANK YOU
Korea’s Steel Market : Recent trends and outlook
88th Session of the OECD Steel Committee19-20. Mar. 2020Paris. OECD Headquarter
Korea Iron and Steel Association | www.kosa.or.kr
