South Korea and Japan see strong steel exports in October
South Korea and Japan both saw strong steel exports in October. Japan exported 1.4 MMT, a 53.0% YoY increase, and South Korea 1.7 MMT, an increase of 19.5% YoY. Both countries have experienced a rapid devaluation in their currencies, with the Japanese Yen falling 28.4% against the dollar to JPY 147.8 and the Korean Won by 18.4% to KRW 1,421.7 in the last 8 months. As a result, Japanese and South Korean steel has become more competitive on international markets.
Mills are also turning to exports due to lower domestic demand. Steel demand is forecast by WorldSteel to fall by 2.5% in S. Korea and grow by only 0.2% in Japan in 2022. Weaker currencies have increased input costs, which is being passed onto consumers. Inflation and supply chain constraints have also hit the steel-intensive automobile, construction, and manufacturing sectors in both countries.
With tighter margins and exports not fully compensating for reduced domestic consumption, steel production has also fallen in both countries. According to WorldSteel Japanese output fell 6% YoY in the first 9 months of 2022, at 67.8 MMT. South Korean output totaled 50.5 MMT over the same period, a reduction of 4.4% YoY. Most steel was sent to other markets in Asia, including China, Thailand, and Vietnam. A significant portion was also exported to the US; 300k tonnes from Japan and 250k tonnes from S. Korea. Combined, this represents an almost four-fold YoY increase in US steel imports.
Coal exports remain slow from Eastern Australia
The pace of coal liftings out of Eastern Australia remained slow in October, averaging 888k tonnes per day, decreasing by 10% YoY. Coal mines in Australia’s eastern regions have continued to be hit by heavy rains amid the third La Nina season in a row, causing significant flooding that has hampered output. This caused an initial slowdown in exports in June 2022 and volumes are yet to recover to normal levels. Maintenance on key freight railways in Hunter Valley has further disrupted deliveries to ports in October. Another closure is planned for 22-23 November.
Industrial action is also threatening exports, with unions in several mines and preparation plants recently voting in favor of strikes, although any have yet to take materialize. These disruptions have caused an uptick in vessel congestion. There are 77 vessels currently waiting in Eastern Australian anchorages, including 20 Capes, 48 Panamaxes, and 9 geared ships. This is 12% above the one-year moving average.