Steel Companies To Recover Price Competitiveness in U.S.

Since the United States lifted the urgent import restriction measure (safeguard) on steel manufacturers, Korean steel companies may benefit from increased exports to the U.S.

In March 2002 when the U.S. decided to impose customs on Korean steel manufacturers, these affected companies shifted its main dealers to those from China and southeastern Asian countries; it seems difficult for them to beef up the amount of exports to the U.S. directly. Dong Bu Steel Co., which manufactures steel sheets, imported 30 percent of its goods to the U.S. in 2001, but this year, the number fell to 6 to 7 percent due to the high tariffs which caused them to lose their price competitiveness in the U.S. market. Making use of the booming construction market in China, they changed their export route to China instead, reducing all of their inventories created by the U.S. safeguard. According to this measure, China makes up 35 percent of Dong Bu’s total export figure, which is expected to reach 900,000 tons this year.

“It is hard to set down a reasonable price to the U.S., for the high transportation fee, but we have more diverse export routes than before,” remarked Dong Bu Steel.

As for Posco Steel, it has annually exported about 700,000 tons of steel sheets to UPI, its joint corporation in U.S., but was excluded as a target of the safeguard and has not been affected so far from the custom problems.

On the other hand, the Steel Association stated its future prospect on exports saying that the amount of the exports to the U.S. will increase. The total amount during January to October this year was 1.1 million tons, a 25 percent reduction from that of 2002. Total exports have also decreased to $630 million, a 13 percent reduction from that of 2002.

“This would work as a new chance for the steel companies. They can change their export route to the U.S, if the economy of China and the southeastern Asian countries becomes aggravated,” explained the Association.

Do-Young Kim nirvana1@donga.com