POSCO raises steel prices again

South Korea’s steel manufacturer, Posco, will raise steel prices by up to 20.7% in a move widely expected in markets to help it pass on soaring prices of raw materials. The price rise, its second this year following a February increase, comes after Posco agreed to a 65% rise in iron ore prices with Brazilian miner Vale and a 205-210% jump in coking coal prices with an Australian supplier from the beginning of April.

Posco said it would raise prices of its hot-rolled steel by 120,000 won, or 20.7%, to 700,000 won ($717.4) a tonne from 17 April. Prices of both cold-rolled steel and shipbuilding plates will also rise by 120,000 won, or 18.0%, to 785,000 won a tonne.

The price of iron ore has risen fivefold since 2001, while coal prices have surged this year because of strong demand from China and supply disruptions in Australia caused by port conditions and poor weather. Despite price increases and strong demand, steel mills face rising costs as tight coal supply is forcing them to turn to the spot market, where prices are about triple those in term contracts, while other cost pressures stemming from freight, scrap prices and alloy-iron prices mount.