China’s large-scale economic stimulus plans are resulting in a rapid increase in the prices of raw materials. South Korean manufacturers are facing increasing risks under the circumstances.

According to industry sources, the spot price of imported iron ore reached US$218 per ton in China on June 18, up 109.6 percent from a year earlier. As a result, the distribution price of hot-rolled steel products in South Korea surged 94 percent in one year to 1.3 million won.

Despite the Chinese governments’ production cut policy, China’s crude steel production volume jumped from 90.2 million tons to 97.9 million tons from January to April this year. This is because the ongoing recovery of the Chinese economy is outweighing the policy for carbon emission reduction.

In addition, the Chinese government’s green steel industry policy is raising the price of ferrous scraps. China’s ferrous scrap imports from South Korea surged 685 percent in the first four months of this year. As a result, the distribution price in South Korea jumped 62.3 percent in one year.

Likewise, the copper price at the London Metal Exchange rose more than 50 percent from US$5,805 to US$9,146 in one year. This is because China’s copper consumption reached 14 million tons, equivalent to 48.7 percent of the global total demand, last year with the development of copper-dependent industries such as the electric vehicle industry.
Source: Business Korea