According to the industry on the 31st, ·,, decided to increase the supply price of steel sheets for automobiles by 50,000 won per ton. The automaker and the steel industry usually sign contracts on a semi-annual basis.
Steel makers have recently demanded an increase in the price of steel sheets for automobiles from finished car makers on the basis of the recent surge in raw material prices including iron ore. According to the Korea Resources Information Service, the price of iron ore soared to $226.46 per ton on the 14th. The annual average price increased gradually from $69.65 in 2018 to $93.44 in 2019 to $108.04 in 2020, and rose further to an average of $176.91 this year.
The price of hot-rolled steel sheets continues to rise, reflecting the soaring raw material prices. Hot rolled steel sheet is a thin slab processed with molten metal, and is the basis for making steel products. The distribution price of hot-rolled steel in Korea was around 800,000 won per ton at the beginning of the year, but it surpassed the record high of 1.3 million won on the 21st.
Hyundai Motor Company and Kia have not raised prices for reasons such as a decline in profitability, but it is known that they have accepted this increase in consideration of the recent rise in raw material and product prices. Other domestic automakers also finished negotiations with steelmakers in the direction of raising.
This price hike is expected to help POSCO and Hyundai Steel improve their profitability. Even though the price of iron ore, which is the main raw material, has risen every year, profitability has deteriorated because the price of steel sheets for automobiles has been tied for the fourth year. In particular, Hyundai Steel produces more than 5.5 million tons of steel materials for automobiles annually, and supplies about 90% to Hyundai Motors and Kia.