South Korea: Shipbuilding Industry to Displace Autos for Steel Demand

The South Korean shipbuilding industry, which has enjoyed the heyday helped by climbing shipbuilding orders amid the global recession, finally emerged as the largest steel demander in South Korea for last year by displacing the auto industry. According to the Korea Iron & Steel Association’s (KISA) analysis on steel shipments structure for 2008, the annual steel shipments, which posted 68.869 million tons, has only shown a 0.8 percent year-on-year increase chiefly due to the economic recession worsened after the fourth quarter last year. Exports, accounted for 24.7 percent (17.032 million tons) of the total shipment volume, have increased by 3.3 percent year-on-year. However, domestic steel shipments have displayed a 0.1 percent decrease by posting 51.837 million tons.
Shipment made to the manufacturing industry was found to be 17.545 tons with a 6.5 percent year-on-year hike, and the largest portion of 6.04 million tons (34.4 percent of the total steel shipments to the manufacturing industry) was delivered to the shipbuilding industry.
The South Korean auto industry, which purchased the largest volume of steel during 2007 amounting to 6.07 million tons, has only posted 5.818 million tons of steel demand for last year. The auto industry has stepped down to the second largest steel demander in the manufacturing industry by holding 33.1 percent
Electricity and electronics (1.806 tons), assembling metal (1.409 tons), and general machinery (954,000 tons) trailed behind the shipbuilding and auto industry in the analysis.
Furthermore, the construction industry, another major steel demander beside the manufacturing industry, has been received 8.434 million tons of steel with a mere 0.4 percent year-on-year increase, reflecting the deterioration of the real economy.
A source from KISA said, “With expansion of sales to actual demanders such as the shipbuilding, machinery and assembling metal industry, the shipments for distribution use are going downhill,” and prospected, “As the domestic shipbuilding industries have already secured the constriction materials for four-year use, the total shipment volume will increase for the time being.”