A rumor has spread that Chinese steel giant Baosteel is mulling the opening of a steel service centre in South Korea and this has raised the concerns of the South Korean steel industry.

As Baosteel supply to General Motors Korea is gradually increasing, it is said that the Chinese steelmaker is considering the establishment of a steel service centre in South Korea.

Some Chinese mills have offices in South Korea but none have a SSC in the country yet. Once a SSC is established, it will most probably function as an outpost for penetration into the Korean steel industry.

GM Korea is buying 89% of its steel from POSCO and the balance from Baosteel and Dongbu Steel. Baosteel share is currently not strong enough to open a SSC. However, the SSC would increase supply once established.

The gap between the domestic mills price and Baosteel price is KRW 100,000 per tonne to KRW 150,000 per tonne and the chances are that the gap might widen with the new SSC's presence in South Korea. It is thought that, with its new SSC, Baosteel would pour excess volumes of hot dip galvanized steel coils into the Korean market.

(Sourced from Korea Metal Journal)