[Graphics by Song Ji-yoon and Chang Iou-chung] |
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The South Korean steel industry is monitoring the related developments as concerns about a potential influx of Chinese products into the country rise following a U.S. decision to increase tariffs on the goods.
According to the Korea Iron & Steel Association on Wednesday, the import volume of Chinese steel into Korea in 2023 was 8.73 million tons, up by 29.2 percent compared to the previous year. As China’s economic recovery is delayed, excessive production within the country is being funneled into Korea, particularly in the form of low-cost Chinese plate and rolled products, and is leading to fierce competition for the Korean steel industry. It is reported that the price of Chinese plates is cheaper by more than 200,000 won ($147.4) per ton than Korean plate prices. In response to China‘s aggressive pricing, Hyundai Steel Co. is reportedly conducting market research to file anti-dumping lawsuits against Chinese plates and rolled products.
Against this backdrop, the U.S.’ recent tariff decision on Chinese steel could exacerbate uncertainties and is worrying for the Korean steel industry. Korea is currently subject to quotas in its steel exports to the United States, which is capped at 2.63 million tons annually. This means Korean companies are unlikely to benefit even if Chinese steel loses its price competitiveness in the U.S. market due to high tariffs. Rather, there is concern that Chinese steel companies, having lost its access to the U.S. market, could intensify their efforts to enter the Korean market with low prices. “With China’s aggressive pricing and the U.S. tariffs, market uncertainties are growing, and we need to monitor the potential impact closely,” a steel industry official said.
The Korea International Trade Association (KITA) is acting by attempting to engage in discussions with the U.S. government, with KITA Chairman Yoon Jin-sik meeting with U.S. Deputy Secretary of Commerce Don Graves on Monday (local time) to push for changes in the current quota for Korean steel. This move is interpreted as an effort to expand the market for the Korean steel industry, which is struggling to contain low-cost Chinese products.
The automotive industry anticipates minimal or somewhat positive effects from the increase in U.S. tariffs on Chinese electric vehicles. But it is also wary of intensifying competition with Chinese eco-friendly cars in the European market thanks to these tariffs. ”If the U.S. market is closed off, Chinese eco-friendly cars may ramp up efforts to enter the European market, potentially leading to fierce market competition between Korean and Chinese companies,” Korea Automobile & Mobility Association (KAMA) President Kang Nam-hoon said.
The Korean battery industry also took a positive view of the U.S. tariff hike, as it expects the price competitiveness of Korean batteries to increase as the price competitiveness of Chinese batteries used in EVs decreases. However, there are some concerns about increased uncertainty in the long term over predictions that China could take unexpected action as nationalistic sentiments rise, and that Korean companies could face unanticipated damages.
Speaking to Korean journalists in Washington DC, KITA Chairman Yoon said the latest developments are not particularly disadvantageous for Korean companies, although being cautious, stating that it is difficult to conclusively determine the impact of the U.S. tariff increase on Chinese EVs.
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