The Korean steel industry is experiencing difficulties due to the spread of the COVID-19 virus. China's steel inventory has risen to a record-high level due to delays in manufacturing and construction operations, and Chinese steelmakers are lowering prices to prune their inventory. To top it off, demand for ships and automobiles has contracted, making the prospect for the steel industry gloomier.
China's industrial recovery rate hit only 58.9 percent as of Feb. 19, said sources in the steel industry on March 10. The operation rate of 7,326 construction projects in China stood at only 10.2 percent. Twenty-five percent of the companies that resumed operations and 48 percent of the companies that failed to resume operations are reportedly struggling due to a lack of manpower and supplies. Due to a slow recovery of the downstream industries, China's steel distribution inventory totaled 23.75 million tons, the highest since 2006.
Domestic steelmakers are also affected by the deepening slump of steel-related industries. Steelmakers are seeking to hike prices due to a sharp rise in material prices in 2019, but the coronavirus outbreak and low oil prices undermine their push for a price hike.
The spread of the COVID-19 virus has disrupted the supply chain of Hyundai Motor and lowered its plant utilization rate. The shipbuilding industry has been steadily demanding a freeze of or a cut in steel prices. In fact, POSCO and Hyundai Steel aggressively pushed for a hike in prices of hot rolled steel plates in March, but has been focusing on maintaining prices as demand has gone down.