SEOUL, May 1 (Yonhap) -- South Korean steelmakers are facing a double whammy of rising iron ore prices and low demand from major clients, industry sources said Wednesday.
Steelmakers have passed high costs of raw materials such as iron ore and coking coal onto customers, but they have difficulties in demanding that their clients such as shipbuilders and carmakers pay more as they are undergoing a slump and restructuring, according to the sources.
"Those clients are demanding steelmakers to freeze or cut product prices as they undergo restructuring or suffer slowing sales in global markets," he said.
Iron ore prices continued to rise to US$93.90 per ton as of April 26 from $82.10 on Feb. 1 and from $72.60 on Jan. 4. On April 12, the prices reached $95.10 per ton, the highest level in five years, according to the state-run Korea Resources Corp.'s minerals information provider KOMIS.
The price hikes come as Brazilian mining giant Vale SA is busy handling the deadly collapse of its mine waste dam in January and as Anglo-Australian miner Rio Tinto Ltd. cuts its 2019 iron ore shipments estimate after a tropical cyclone hit its first-quarter shipments.
Steelmakers, now in talks with clients, aim to raise steel product prices in the second quarter to reflect higher raw materials costs in automotive steel, shipbuilding plates and section steel prices.
POSCO and Hyundai Steel Co. saw their first-quarter net profits plunge from a year earlier due to increased costs. POSCO's net profit fell 28 percent on-year to 778 billion won in the January-March period, and Hyundai Steel's declined 36 percent to 114 billion won.
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