Business Korea reported that more than 20% wakening of South Korean currency since 2022 start is impacting POSCO & Hyundai Steel due to a drop in export volume amid production disruptions. POSCO & Hyundai Steel have dealt with fluctuations in exchange rates through a natural hedge, which means purchasing raw materials with the foreign currencies earned through exports. But this mechanism will not work normally beginning in the fourth quarter of this year due to flooding at Pohang Works and a strike at Hyundai Steel.POSCO has redirected a significant portion of its export volume to the domestic market, as domestic supply has been disrupted due to damage from Typhoon Hinnamnor. POSCO announced on 16 September that production disruption due to the typhoon was estimated at 1.7 million tonnes of steel products and that it would convert exports to domestic consumption as much as possible in order to minimize disruptions in domestic supply.The won-dollar exchange rates stood at 1,100 won at the beginning of this year, but crossed the 1,300 won level in July and have stayed at the 1,400 won range since 23 September. A strong US dollar is usually advantageous for exporters, but it acts as a cost burden when they import raw materials.
Business Korea reported that more than 20% wakening of South Korean currency since 2022 start is impacting POSCO & Hyundai Steel due to a drop in export volume amid production disruptions. POSCO & Hyundai Steel have dealt with fluctuations in exchange rates through a natural hedge, which means purchasing raw materials with the foreign currencies earned through exports. But this mechanism will not work normally beginning in the fourth quarter of this year due to flooding at Pohang Works and a strike at Hyundai Steel.POSCO has redirected a significant portion of its export volume to the domestic market, as domestic supply has been disrupted due to damage from Typhoon Hinnamnor. POSCO announced on 16 September that production disruption due to the typhoon was estimated at 1.7 million tonnes of steel products and that it would convert exports to domestic consumption as much as possible in order to minimize disruptions in domestic supply.The won-dollar exchange rates stood at 1,100 won at the beginning of this year, but crossed the 1,300 won level in July and have stayed at the 1,400 won range since 23 September. A strong US dollar is usually advantageous for exporters, but it acts as a cost burden when they import raw materials.
