March 07, 2019
Due to quite moderate steel output growth (up 2% YoY), South Korea's imports of bulk ferroalloys (manganese, silicon, and chrome) has not changed much in 2018, according to the customs statistics released by TexReport.
The only exception was ferromanganese. The geographical structure of the supply differed from the previous years in all market segments.
- Imports of all kinds of ferromanganese were 24,077 t, up 10 times YoY
- Silicomanganese imports were 116,711 t, down 9% YoY
- Imports of all kinds of ferrosilicon totaled 243,104 t, down 14% YoY
- Imports of different grades of chromium alloys reached 605,991 t, up 1% YoY
Anti-Dumping (AD) tools didn't help to increase domestic SiMn production in South Korea
After the imposition of 19.6% AD duty on Ukrainian SiMn imports in September 2017, the supply of the alloy from Ukraine continuously decreased and finally ceased last year. It helped India to become the second biggest SiMn supplier to South Korea (20,793 t, up 35% YoY) after Malaysia (75,642 t, up 0.5% YoY). Vietnam has taken third place with 19,550 t (up 14% YoY) of the alloy shipments. Noteworthy, that India and Vietnam keep up top positions in the Korean SiMn imports even though AD duties were also imposed (the rate for those countries were lower than for Ukraine).
Even though local producers have enough capacity to cover domestic demand for manganese alloys, their share in the domestic SiMn market remains at 60%. Even after the trade measures were imposed the output stayed the same due to the high electricity tariffs and absence of Mn ore resources in the country. The average annual tariff for electricity for South Korean ferroalloy plants is around $0.105/kWh, which is the highest among countries that produce ferroalloys.
Indian ferromanganese keeps relative competitiveness in the Asian market only
Due to an absence of local high-quality manganese ore sources, Indian ferromanganese producers are suffering losses since 2016, when the ore quotes hit records highs for the first time. After consolidation of manganese alloys supply in Europe and increasing alloy output in the vertically-integrated Malaysian plants, Indian exporters were forced to either switch on SiMn production and largely domestic sales or to offer the alloy to those Asian markets, where inputs are higher then their own. One of those countries is South Korea: in 2018, total Indian HC FeMn supply totaled 21,786 t vs. 1,230 t in 2017.
Having one of the lowest input costs in the world, Malaysia has shipped 1,723 t of HC FeMn to South Korea last year, up 11 times YoY.
Tight competition has changed the structure of Korean FeSi imports
Malaysian FeSi exports were booming since 2016 after launching the new capacities in the country. Despite Japan being the key market outlet for Malaysian plants, exports to South Korea were 31,608 t last year vs. a mere 7,811 t in 2017. It made the country the second biggest FeSi supplier to South Korea after China, whereas previously Russia took the silver medal. However, in 2018, import of Russian FeSi in South Korea decreased fourfold, to 21,998 t. The reason for that is lower Russian material competitiveness in terms of production cost. For now, the structure of the Korean FeSi imports is as follow:
- China 73%
- Malaysia 14%
- Russia 10%
- Others 3%
India redirects FeCr sales from China to other Asian markets
While demand for imported FeCr in China continues to go down amid domestic output increase, leading global and regional exporters are looking for new outlets. In 2018, India has increased its HC FeCr sales to South Korea by 26% YoY, to 234,061 t which is almost equal to the result of the biggest importer, South Africa (237,432 t, down 20% YoY).
In the long run, the demand for imported ferrochrome will decrease further in China, which may lead to more intense competition between Russian, African and Indian exporters in the global markets.
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