Posco, South Korea’s largest steelmaker, will raise product prices by as much as 25 percent from May 3, taking advantage of strong demand from makers of cars and appliances to pass on higher raw material costs.
Asia’s third-biggest mill will increase prices for hot- rolled coil by 25 percent to 850,000 won ($766) a metric ton, and for cold-rolled coil by 23 percent to 965,000 won, according to an e-mailed statement today. Rival Hyundai Steel Co. also announced today it will increase prices by as much as 23 percent.
Posco joins China’s Baoshan Iron & Steel Co. in raising prices this week as the global economic recovery accelerates, and mining companies demand as much as a doubling in the prices of iron ore and coal, used in making steel. ArcelorMittal, the world’s biggest steelmaker, said last month prices may need to increase by a fifth to help cover the higher costs.
“We are raising prices because raw material suppliers are demanding price increases of 90 percent to 100 percent for iron ore and coal this year,” Posco said in the statement. “Steel demand from the auto and home appliance industries has shown strong growth.”
Posco dropped 0.4 percent to close at 523,000 won in Seoul. The stock has fallen 15 percent this year, compared with a 3.2 percent rise in the benchmark Kospi index. Hyundai Steel rose 2.8 percent to close at 90,900 won.
Brazil’s Vale SA and BHP Billiton Ltd. this year broke with a 40-year custom of selling iron ore on annual contracts, with the Brazilian supplier winning a 90 percent price increase from Japanese mills for quarterly contracts started April 1. Posco said on April 2 it “provisionally” agreed to pay Vale $110 a ton for the second quarter, an increase of 86 percent.
Higher Sales
Posco said on March 10 its product prices may need to increase by up to 20 percent because of rising raw material costs. The Korean mill on April 13 raised its full-year sales forecast by 8 percent, after posting a more than fourfold jump in first-quarter profit.
Baoshan Steel, China’s largest publicly traded steelmaker, this week said it will raise prices of cold-rolled products by 200 yuan ($29) a ton. Hyundai Steel said it will raise hot- rolled coil prices by 160,000 won a ton to 850,000 won, starting May 1, while reinforcing bars will be increased by 40,000 won to 816,000 won.
Prices of steel plates, used to make hulls of vessels, will rise 9.8 percent to 900,000 won a ton, Posco said. That is the smallest increase among its steel products as shipyards are suffering from a slump in new orders, it said.