Day: 19 August 2020

South Korea produced 345,711 vehicles in July, down 3.8% year on year, but up 16.4% from June, the Ministry of Trade, Industry and Energy said Aug. 18, amid higher sales.

The month-on-month increase was the second straight monthly hike, indicating that the car industry had rebounded. June’s output was up 28.5% from May, while May was down 20.2% from April.

Sales for July gained 8.9% year on year to 164,539 vehicles, but was down 20.1% from June.

Following the production trend, exports in July fell 11.7% at 181,362 vehicles from the year before, but up 43.2% from June, the ministry said, citing the COVID-19 pandemic.

With the July figures summed up, January-July production was 17.4% lower at 1.97 million vehicles, sales at 1.09 million vehicles, up 7.5%, while exported amounted to 1 million vehicles, down 30.7% — against the corresponding 2019 period.

South Korea’s environmentally friendly vehicle sector stood out with 110,330 vehicles made over January-July, rising 32.9% from the previous year, after 17,360 vehicles were produced in July, a 39.3% spike from July 2019, but down 20.6% from June.

On the sales side, eco-friendly vehicles chalked up 27,468 units in July, up 12.5% year on year and 9.6% higher from June. January-July sales amounted to 155,094 units, a 13.7% gain from the year before.

The rebound in South Korea’s car industry has led to domestic steelmakers revising their projections for 2020. On July 31, Posco revised its annual crude steel production to 35.3 million mt, up from 34.1 million mt foreseen in April, and forecast sales at 33.8 million mt, up from a prior 32.4 million mt.

The rebound was also reflected in the country’s largest automotive producer Hyundai Motor, with its June and July domestic sales seeing a corresponding year-on-year growth of 37.2%, or 83,700 units, and 28.4%, or 77,381 units, respectively. Its accumulated year-to-date sales managed to attain a 4.0% growth on year, to 461,994 units, largely due to the rebound in volumes in June and July.

— Clement Choo, Samuel Chin

Seaborne iron ore prices surged to new highs on Tuesday, while Chinese steel futures followed more slowly. Optimism about autumn demand and new injections of liquidity to the economy are driving prices higher.

The Kallanish KORE 62% Fe index jumped $4.82/t to $126.50/dry metric tonne cfr Qingdao, just a few cents short of the 2019 peak of $126.68/dmt cfr on 3 July that year. The Kallanish KORE 65% Fe index leapt $4.51/t higher to $134.06/dmt cfr, and the KORE 58% Fe index gained $3.01/t to $110.98/dmt cfr. 

On the Dalian Commodity Exchange January 2021 iron ore settled up CNY 15.5/tonne at CNY 849.5/t, while on the Singapore Exchange September 62% Fe futures settled up $5.81/t at $122.71/t. The same contracts for 65% Fe and 58% Fe futures settled up $5.89/t at $132.11/t, and up $0.75/t at $107.32/t respectively.

On the Shanghai Futures Exchange the October rebar contract closed CNY 16/t higher than Monday at CNY 3,848/t ($554/t), while the same contract for hot rolled coil closed up CNY 34/t at CNY 3,984/t. In Tangshan, billet prices were flat at CNY 3,410/t.

Ferrous markets, but especially iron ore, have been buoyed by optimism over Chinese steel demand in the coming months. This implies that China’s blast furnaces will maintain very high operating rates at least until the end of autumn. 

In order to back up this optimism, the Chinese government has been keen to balance the need to have plentiful financing available to support the recovery, but strict limits on the use of funds to prevent them from being wasted.

On Monday the weekly State Council executive meeting stressed that liquidity would be maintained but there would be no “…flood irrigation.” On the same day, however, the People’s Bank of China injected CNY 700 billion into credit markets through a one-year medium-term lending facility. This helped to support the view that strict controls on credit will not mean a shortage of ready funds for the rest of the year.

Steel and iron ore markets have also been bolstered by inventory levels. Although these have increased slightly for both steel and iron ore, the pace of increase has been very slow despite high production levels and steel demand passing the lowest point of the summer.

Numerous German steel and metal working companies have coped with the Coronavirus pandemic challenge in constructive ways, since the virus started dictating the rules of business, Kallanish notes.

Companies interviewed by fabricators federation WSM cited the relocation of input material sourcing closer to home and the restriction of international traffic among the adjustments they were forced to make.

“The lockdown did not only hit our suppliers but also the transport companies involved,” says EJOT Holding, a manufacturer of fasteners. “Looming closures of borders made us transfer transports to rail. Also, one of our tool suppliers in Italy stopped production, so we returned to making parts in-house,” Kallanish hears from the company.

A similar issue is described by Wilhelm Schumacher, another maker of fasteners. “With the exception of one Austrian firm, we have no suppliers in other countries, so our supply chains remained intact,” it reports.

The relocation to in-house production was highlighted also by traditional hardware maker Gust Alberts. “The production sites in Germany and Europe will reconquer their role; it has become clear now that supply safety must not be put at risk,” the company states.

Gust Alberts managing director Dietrich Albers emphasises the importance of open communication among staff within the company. “We met with our employees each day to keep them updated about measures in the context of the crisis,” he says, adding that “…information creates confidence.”

Fifteen tariff-free quota allocations within the EU safeguard system have reached a critical level, Kallanish learns from the official calculation system provided by the European Commission.

Despite the overall downturn in imports seen during the first half of the year, importers of some key products will need to wait until the beginning of October for new allocations to become available.

As anticipated, rebar quotas for both Turkey and Russia have been completely exhausted. Tariff-free quotas for Turkish and Russian wire rod are almost completely finished. Hollow sections, angle shapes and merchant bars imports from Turkey will also need to wait until the beginning of October for new quotas.

In the flat products sector, organic coated sheet quotas have been exhausted for the “other countries” group as well as for Turkey. Metallic coated sheet from India – not for the automotive sector – has also used up almost all allocations, as has Chinese metallic coated sheet specifically for the automotive sector.

In the stainless area, cold rolled coil quotas from other countries and Vietnam are also nearly finished. Finally, Turkish gas pipe has used all available quotas.

Based on the imports seen during the first six months of the year, Eurofer calculated that overall imports of carbon steel finished products this year could reach approximately 21 million tonnes, the lowest level since 2014.