Moody’s Investors Service said that South Korean steelmakers will suffer a sharp decline in demand and prices due to the growing coronavirus impact on the steel and related industries.
Moody said “In Korea, we expect domestic and export demand will fall dramatically, reflecting lower auto production and sluggish housing construction. The rated steelmakers in Korea have high exposure to the auto sector and are therefore vulnerable to declining auto production,”
The country’s local steelmakers, such as POSCO, Hyundai Steel Co. have suffered due to weak demand from construction firms and shipbuilders since the 2008 financial crisis. These steel makers are now witnessing weak demand from the auto sector due to the COVID-19 outbreak in the country.
The report said “On the supply side, steelmakers will cut production but not to an extent sufficient to curb oversupply. Steel inventory buildup is likely, owing to the weak end markets and difficulty in drastically reducing blast furnace utilization”.
It added, “Given these factors, along with weaker distribution prices in China and elevated steel inventory levels, prices and spreads should fall further over the next three months or so”.
News Source:YONHAP NEWS AGENCY
