SEOUL, February 11 (AJP) - China’s steel prices have fallen to an eight-week low, heightening concerns that South Korea’s steel industry could face mounting pressure amid new European carbon rules and rising domestic electricity costs.
Rebar futures slipped below 3,060 yuan ($425) per ton on Monday, their lowest level in two months, according to Trading Economics. The decline comes as Chinese steelmakers scale back production ahead of the extended holiday shutdown, while blast furnace and electric-arc furnace operators conduct scheduled maintenance.
Parts of Hebei province may also impose temporary output curbs due to air pollution alerts.
Weaker domestic demand and falling futures prices typically lead Chinese producers to lower export offers, weighing on prices across Asian markets, including South Korea. Domestic steel prices in South Korea often adjust more slowly, leaving producers squeezed between stable production costs and delayed price declines.
Meanwhile, iron ore inventories at major Chinese ports climbed to about 162 million tons last week, the highest level since 2022, suggesting stockpiles remain elevated even after mills completed pre-holiday restocking.
Analysts warn surplus material could be cleared through exports into regional markets, potentially rerouted via Southeast Asia and ultimately adding pressure to South Korea’s steel distribution sector.
South Korean producers are simultaneously preparing for the European Union’s Carbon Border Adjustment Mechanism (CBAM), which requires exporters to report embedded carbon emissions and, from 2026, purchase certificates covering those emissions. The Korea Chamber of Commerce and Industry estimates the scheme could cost South Korea’s steel sector more than 3 trillion won ($2.3 billion) over the next decade.
Domestic cost pressures are also rising. The government plans to lower industrial electricity rates during daytime hours while raising nighttime tariffs and introducing regional rate differences. Such changes are expected to particularly affect electric-arc furnace operators, for whom electricity represents a major share of production costs.
Although industrial power consumption has fallen to a five-year low, Korea Electric Power Corp. has posted record revenue, prompting industry complaints about elevated power costs.
“Despite rising concerns over industrial electricity rates, companies are continuing efforts to strengthen technological competitiveness in preparation for the EU’s CBAM,” a steel industry official said. “We also need to closely monitor how China’s price decline could affect the domestic market over the medium to long term.”
* This article, published by Aju Business Daily, was translated by AI and edited by AJP.
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