Domestic Steelmakers Leverage Tariff Protectionto Restore Margins
South Korean steel producers have moved swiftly tocapitalize on the newly imposed anti-dumping duties on Chinese steel imports,with POSCO Holdings Inc. leading the charge by raising prices for thick steelplates. The company recently concluded negotiations with major domesticshipbuilders, including HD Korea Shipbuilding & Offshore Engineering Co.,Hanwha Ocean Co., and Samsung Heavy Industries Co., setting second-quarterprices at approximately 800,000 won ($556) per ton. This represents a significantincrease from first-quarter prices, which were in the upper range of 700,000won, a level that industry insiders acknowledged fell below manufacturing costsfor many domestic producers.
The price adjustment comes in direct response to SouthKorea's Ministry of Economy and Finance officially implementing preliminaryanti-dumping duties on steel plates from China on April 24. These provisionalmeasures target hot-rolled carbon or alloy steel plates with thickness of atleast 4.75 mm and width of at least 600 mm. The duties vary by manufacturer,with rates ranging from 27.91% for Baoshan Iron & Steel Co. and itsaffiliates to 38.02% for Hunan Valin Xiangtan Iron and Steel Co. and associatedcompanies. Other Chinese suppliers face a standard rate of 31.69%. The measureswill remain in effect for four months, until August 23, 2025, while authoritiescomplete their investigation.
Industry analysts note that the price increases reflectboth the immediate impact of reduced Chinese competition and the ongoingstructural challenges in the steel sector. "Steel companies andshipbuilders have agreed to hold quarterly price negotiations starting thisyear," explained one industry source familiar with the discussions."The price was set at around 800,000 won, or slightly above, perton." This shift to quarterly pricing mechanisms suggests a more dynamicapproach to contract negotiations, allowing steelmakers to respond more rapidlyto changing market conditions and regulatory developments.
Hyundai Steel Follows Suit Amid Supply Concerns
Following POSCO's lead, Hyundai Steel Co., South Korea'ssecond-largest steelmaker, has also entered negotiations to increase prices forthick steel plates supplied to Korean shipbuilders for the first half of 2025.While final terms are still being discussed, industry observers anticipate thatHyundai Steel's prices will align closely with POSCO's, settling around the800,000 won per ton mark. This coordinated pricing strategy reflects theoligopolistic nature of South Korea's steel industry, where a small number oflarge producers dominate the market.
The price adjustments come amid growing concerns aboutsteel supply constraints following the imposition of tariffs. "Dataindicate a decline in Chinese steel supply. Raising domestic thick plate pricesis unavoidable," noted a steel company official who requested anonymitydue to the sensitivity of ongoing negotiations. This sentiment underscores thebroader market dynamics at play, where reduced import competition hasstrengthened the bargaining position of domestic producers while simultaneouslyraising concerns about potential material shortages in a booming shipbuildingsector.
The tariff measures were implemented following apreliminary investigation by South Korea's Commerce Commission, whichdetermined that Chinese hot-rolled thick plate was being dumped in the Koreanmarket at prices that caused significant damage to domestic industry. TheMinistry of Strategy and Finance issued an administrative circular on April 4to publicize details of the measure, with formal implementation beginning onApril 24. This relatively swift transition from announcement to enforcementreflects the perceived urgency of addressing what Korean authorities view asunfair trade practices.
Key Takeaways:
• POSCO Holdings has increased second-quarter thick steelplate prices to approximately 800,000 won ($556) per ton, up from the upper700,000 won range in Q1, following South Korea's imposition of anti-dumpingduties of up to 38% on Chinese steel imports
• Hyundai Steel is expected to implement similar priceincreases for shipbuilding steel, with industry sources indicating prices willlikely settle around the 800,000 won mark despite ongoing negotiations
• The provisional anti-dumping duties, effective from April24 to August 23, 2025, target Chinese hot-rolled steel plates with ratesvarying from 27.91% to 38.02% depending on the manufacturer, creating aprotective environment for domestic producers while raising concerns aboutpotential supply constraints
