South Korean steelmakers are struggling with a flood of cheap Chinese imports and import barriers set by a number of industrialized countries to protect their local industries, market watchers said Thursday.
According to data provided by the Korea Iron and Steel Association and Korea Trade-Investment Promotion Agency (KOTRA), South Korea imported 11.21 million tons of steel products in the first half, up 15.5% from a year earlier.
Of the total, steel from China reached 6.55 million tons, a surge of 31% on-year. This accounts for 58.4% of all steel imports in the cited period, up from 51.5% tallied in the first six months of 2013, according to South Korea's (Yonhap) News Agency.
The steel association said demand for Chinese steel comes from the fact that it is much cheaper than those made in the country. Chinese steelmakers sell 1 ton of steel products at US$738, down from $789 last year.
In particular, import of H-beams -- used in construction of tall buildings, bridges and roads -- jumped 27.4% on-year to 410,000 tons.
Chinese H-beams are traded at 590,000 won ($574) per ton, 160,000 won cheaper than those made in the country, and there has been persistent speculation that Chinese steelmakers are unfairly undercutting prices.
Hyundai Steel and Dongkuk Steel Mill Co. recently petitioned with the Korea Trade Commission to investigate Chinese-made steel imports.
Daehan Steel Co. and Hyundai Steel have also asked for criminal investigation on allegations that Chinese steel imports are being disguised as locally made products.
Beside the onslaught of cheap imports, local steelmakers are concerned because industrialized countries such as the United States are taking steps to erect barriers to keep out steel imports.
In the first half, exports of steel products to the US soared 55.9% on-year to 2.61 tons. This is worth $2.37 billion, a 44.3% increase in value.
"The increase was helped by the rise in demand for steel products used in oil drilling and shale gas development," KOTRA said.
The state-run agency and steelmakers said such increase in exports may have triggered the recent move by the US Commerce Department to slap punitive duties ranging from 9.89% to 15.75% on South Korean steel pipes. The pipes are using in drilling for oil.
Earlier in the year, the US International Trade Commission preliminarily determined that steel nails made in South Korea and some other countries have been subsidized.
In addition to the United States, Canada is in the process of investigating "unfair" price cutting for iron bars used to reinforce concrete.
"With moves by countries to engage in protectionism, local steel mills have no choice but to make more value-added products and make inroads into new markets," an executive at a local steelmaker said.