Metallurgy / Chemicals / Rubber & Plastics

The construction and manufacturing industries of many countries have begun to pick up, and the demand for steel is increasing.

At present, South Korea has also ushered in the peak season for construction sites. However, due to the serious shortage of steel bars, the main building material, many construction projects have been postponed or suspended.

With the completion of a large number of residential buildings in South Korea in recent years, people's travel demand has increased. Starting from September 2018, the Jukjeon Station in Daegu City, South Korea has begun to expand and increase exports.

As the location of Jukjeon Station in Daegu City is on a busy road section, local people have long expected that the road will be unblocked after the completion of the project this month. However, due to the shortage of steel bars, the project has been postponed to September this year.

According to statistics, in the past two months, 59 construction projects in South Korea have been interrupted due to insufficient supply of major building materials such as steel bars. Many of them are government-led public construction projects.

After the outbreak of the epidemic in 2020, South Korean construction demand has shrunk, and major steel companies have reduced production. After entering this year, due to the construction industry recovering faster than expected, the demand for rebar in South Korea has surged. According to statistics, the current national steel rebar inventory in South Korea is only 80% of the same period in 2020.

At this juncture, a plant of Hyundai Steel, which accounts for more than 10% of the average daily supply of steel bars in South Korea, has ceased production on the 10th of this month due to an accident, further leading to insufficient supply of steel bars. At the same time, the price of scrap steel, the raw material for the production of steel bars, has risen by 80%.

The decline in steel production capacity and the increase in raw material prices have led to a rapid rise in the price of Korean steel. The steel bar with a diameter of 10 mm, which is the price indicator, reached 970,000 won (about 5,544 yuan) per ton on the 14th of this month, an increase of nearly 50% from the end of 2020. This is the first time that Korean steel has exceeded 900,000 per ton since 2008. won.

Nearly 40% of the steel used in the construction industry in South Korea comes from imports. However, due to the strong domestic construction demand of the main exporting countries that provide steel bars to Korea, exports have dropped sharply. The price of imported steel bars that were originally lower than Korean steel bars has soared by 60% year-on-year, and even surpassed Korean steel bars. High, it also makes the shortage of steel bars in South Korea's construction industry worse.

In the case of imbalance between supply and demand, many small and medium-sized construction companies in South Korea have launched a fierce "rebar grabbing war." In some areas, the price of steel bar has been called for more than 1 million won per ton, and it may even be impossible to buy it with more money.

Recently, the South Korean government convened people in the steel industry to urgently discuss solutions and plans to centrally control the stockpiling of steel bars by middlemen.

As the supply problem cannot be improved in the short term, industry insiders predict that South Korea’s “rebar shortage” is likely to continue until the end of this year.