|
|
South Korea Metals Report Q4 2009Product Type: Market Research ReportPublished by: Business Monitor International Published: September 2009 Product Code: R302-7995 Description The South Korean steel industry is enjoying a revival in export markets and a modest pick-up in domesticdemand, but BMI’s latest South Korea Metals Report warns against complacency, with a likelyappreciation of the Korean won posing a threat to the industry’s external competitiveness.In H109, South Korean crude steel output fell 17.2% y-o-y to 22.85mn tonnes, but output in Q2 was up17.1% over Q1 as the depreciation of the Korean won boosted exports. By mid-2009, the weak won madeSouth Korean steel products 36% cheaper than Japanese production. At the same time, the Chinesegovernment’s stimulus package is boosting Asian demand at a time when inventories are near depletion. As a result, POSCO secured a marked increase in sales in Q2 with exports to China up 66% y-o-y to926,000 tonnes. Additionally, the domestic market is being lifted, assisted by resumption in orders in theshipping industry, which is lifting demand for heavy sections, as well as the automotive sector, notablyHyundai. The domestic situation is changing, with BMI’s core scenario improving. In line with improvingmacroeconomic trends since March 2009, we have decided to revise up South Korea’s real GDP growthforecast from -3.3% to a more modest contraction of -1.9%. This forecast is based on expectations of abetter-than-expected outturn in Q209, and a continued, if modest, recovery through H209. One of the keyfactors underpinning private consumption in H109 was the government’s massive fiscal stimulus,unveiled in a series of special measures from late 2008 to July 2009. The key question is how much of the additional capacity due to be installed over the next two years willbe utilised. BMI’s crude steel production forecast of 46.04mn tonnes in 2009 (down 14% y-o-y) wouldimply a utilisation rate of just over 74%. We forecast output at 51.55mn tonnes in 2010, with outputgrowing by 12% as the recovery picks up pace. However, this will still mean capacity utilisationsustained at around 74%, well down on the 89% utilisation rate estimated in 2008. POSCO CEO Chung Joon-Yang voiced his concern that the crisis in the steel industry could last betweentwo to three years, leading to a 30% reduction in output. It will therefore be some years before the SouthKorean steel industry approaches its full potential, with BMI’s forecasts showing that 2008 output levelswill not be exceeded until 2011. Growth will be limited by the maturing of the domestic steel market andthe rapid growth in China’s industrial capacity, which has limited steel and steel product export growth,although there is still room for growth. Nevertheless, by 2013 steel exports will by up 16.5% over 2008levels at 23.4mn tonnes, while domestic finished steel use will rise 1.3% to 59mn tonnes. Table of Contents
|
|
||||||||
MindBranch has been the leading provider of industry and investment research from more than 550 independent research firms since 1992. With over 90,000 market research reports, MindBranch is your trusted source of competitive business intelligence. |