South Korean Steel Consumption Forecasted to Increase by 4.8% in 2011

South Korean apparent steel consumption is forecasted to increase by 4.8% to 55.07 million tonnes in 2011 from 2010, according to POSCO Research Institute (POSRI). The apparent consumption is expected to increase for 2 years in a row due to steel demand extension from manufacturing industry and demand recovery from building construction. Meanwhile, the forecasted figure is lower by 6% than the peak volume in 2008. POSRI forecasts domestic steel output would increase by 7.8% to 69.91 million tonnes in 2011 from 2010 and renews the record high. Steel export is forecasted to increase while the import to decrease largely for hot rolled sheet and semi-finished steel. Thus the export would exceed the import for the first time in 10 years.

Mr. Joo-Han Kim, president of POSRI, explained South Korean steel makers would enter even severer competitions due to their aggressive capacity expansion larger than domestic demand growth. He said domestic steel consumption stagnates while steel output expands mainly by Hyundai Steel’s capacity enhancement in 2011. Steel export is estimated to increase by 4.0% to 25.16 million tonnes in 2011 from 2010 while steel import to decrease by 11.9% to 22.63 million tonnes. In 2010, the import was higher than the export by 1.48 million tonnes. In 2011, the export would be higher than the import by 2.54 million tonnes.

POSRI estimates South Korea’s GDP would increase by 4.1% in 2011 from 2010. Construction investment is expected to increase by 1.2% year-to-year, improving from 0.6% minus in 2010. Meanwhile, automobile output growth is estimated at 2.9% and shipbuilding volume growth at 2.8%, largely narrower than 20.3% and 7.8% in 2010.

Mr. Kim said domestic steel consumption is estimated to have increased by 15.7% to 52.56 million tonnes in 2010 from 2009, which rebounded after 2 years. Steel output was likely to increase by 14.0% to 64.87 million tonnes, up by 510,000 tonnes from 2008. Steel export is estimated to have increased by 17.8% year-to-year while steel import to have increased by 24.7%.