Color steel: Dongkuk falls to third place as rivals encroach on its home turf

The growing demand for color-coated steel is fueling competition among South Korean manufacturers of specialty steel products, raising concerns about their profitability at a time of rising raw material costs.

Dongkuk Steel Mill Co., the country’s third-largest steelmaker, has for years been the dominant player in the domestic color steel market, but in the first quarter it gave up its top post to KG Dongbu Steel Co., the runner-up.

Other companies such as POSCO Steeleon Co., SeAH Coated Metal Co. and Aju Steel Co. have also raised their market shares, encroaching upon the market leader.

Dongkuk Steel’s standing in the domestic market fell to third with a market share of 21% in the first quarter of this year, from 35% at the end of 2020. KG’s share rose to 26% from 25%, according to industry data.

POSCO Steeleon, formerly known as POSCO Coated & Color Steel Co., saw its local market share rise to 23% from 20%. SeAH and Aju also increased their portions to 12% and 7%, respectively, from 10% and 3%.

According to the Korea Iron & Steel Association on Friday, the domestic output of color steel plates reached 340,000 tons in the first quarter, up 8.6% from 313,000 tons in the year-earlier period.

“Output volumes have increased since last year as steelmakers expanded their facilities to meet the growing demand for color-coated steel plates,” said a local steel company official.

BOOMING INDUSTRY

The color steel plate business is booming with increasing demand from a variety of sectors ranging from home electronics companies to construction firms and even chipmakers, as consumers have become more assertive and seek a sense of style in their everyday goods.

Since the finish of color-coated steel replicates the texture of wood grain, the smoothness of marble and the roughness of granite through a wide spectrum of patterns, end products are hard to identify as steel based on appearance alone.

With the growing popularity of color steel plates, steelmakers are now even producing antibacterial color products for use in the operating rooms at hospitals and coronavirus clinics.

The COVID-19 pandemic ushered in the notion of the "at-home economy," in which increased time spent at home has prompted consumers to invest more in home appliances, such as TVs, refrigerators and washing machines, driving up demand for color steel plates.

One of the key clients of color steel plates is Samsung Electronics Co., which lures consumers with its Bespoke high-end products.

LG Electronics Inc. is also using color plates widely in its premium goods under the Objet Collection brand.

Color steel plates have higher margins, largely twice the price of general steel products.

Dongkuk’s color steel products were sold at 1.46 million won ($1,162) a ton in the local market last year, up 21.5% from the previous year.

DONGKUK TURNS SIGHTS OVERSEAS

Industry watchers said local steelmakers may find it hard to raise their product prices this year despite rising raw material costs, which in turn could hurt their profitability.

The price of hot-rolled coil, a basic steel material, has risen more than 20% so far this year in the wake of the Russian attack on Ukraine.

“Steelmakers can’t pass on the hike in raw material costs to their product prices as much as they wish, as they’re fiercely competing against each other,” said an industry official.

Korean steelmakers produced a combined 2.38 million tons of color steel in 2021, up from 2.04 million tons in 2020, according to industry data.

Dongkuk, which is losing on home turf to its rivals, is turning its sights overseas for expansion.

Last November, Dongkuk announced plans to increase its overseas facilities to as many as eight factories and sales offices in seven countries by 2030 from the current three plants – one each in Mexico, India and Thailand.

The company said at the time that it aims to grow its color-coated steel business to 2 trillion won in revenue with an annual production capacity of 1 million tons by 2030 from the current 1.4 trillion won sales at 850,000 tons a year.

Dongkuk’s color steel products accounted for 62% of its entire steel exports last year, up from 55% in 2020.

Write to Kyung-Min Kang at Kkm1026@hankyung.com
In-Soo Nam edited this article.