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Mar.29.2024 1USD=7.095RMB
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HR SSCs Saw Profit Plummet Amid Gained Sales

https://en.steelhome.com [SteelHome] 2019-04-17 11:48:35

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Korean major steel service centers trading hot rolled sheets netted fairly improved sales last year, but had to see operating profit plummet, according to the electronic official notice of Finance Supervisory Service. The major twelve hot rolled sheet and coils Steel Service Centers(SSCs) wrapped up their total sales of 2,005.6 billion won last year, which increased 12.8 percent from 1,778.4 billion won in 2017. SeAH L&S reported a total of 434.1 billion won with a 3.2 percent gain, as the company recorded largest sale.

E&G Steel recorded a highest growth rate in sales last year, netting a total of 121.8 billion won sale, which raised 74.6 percent year on year thanks to the aggressive investment. All in all, seven of the entire twelve HR SSCs improved 10 percent in sale, while Samhyun Steel and Taechang Steel saw sale increase over 30 percent stepping up the 200 billion won sale range. On the contrary, GO Steel and Daeyeon International downgraded sales by 10.6 percent and 0.6 percent respectively, while the former decreased sale under 100 billion won, the latter downed to 74.6 billion won.

Last year, Korean HR SSCs worsened profitability pronouncedly. The operating profit of twelve HR SSCs totaled 22.9 billion won, plummeting above 54.5 percent from 50.3 billion won in 2017. Their net earnings were 12.5 billion won, downgrading 75.7 percent from 51.5 billion won of 2017. The main cause of their poor profits appear due to difficulties in raising the prices on distribution chain. HR distributors tried many times to increase prices in a bid to increase profitability, but had to fail because of strong resistance from the end-users as well as due to the distribution demand constraints.

Last year, China steel mills maintained high export offers to Korea, causing the Korean companies depended upon imports therefrom to deteriorate the profitability. Hanil Steel, the Korean largest steel importer, turned into the red in the net profit, operating profit and current income, while Dongah Steel faced with decline by 96.3 percent in operating profit, down 33.1 percent in current profit and down 4 percent in net earnings.

This year, as the Chinese materials flooded into the Korean market beginning early in the year the Korean steel distributors have been suffering. The price of anti-import grade - GS steels – fell down to 660,000 won per ton early in February from 700,000 won per ton traded at the end of 2018. Most recently, the prices on the distribution chain raised up to 690,000 won per ton, due largely to the risen offering prices in two times earlier. It is known that the profitability of HR distributors is still far from improvement.

Source: Steel&Metal News
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