Seven days of strike action by South Korean truckers is causing severe disruptions to the country’s supply chains. The Cargo Truckers Solidarity union is calling for minimum pay guarantees amid rising fuel prices. On Sunday, steelmaker POSCO announced that operations at its plants would be part-suspended due to a lack of storage space for finished products. South Korea produced 22.4 MMT of steel in the first four months of 2022. With steel production healthy so far this year, mills’ appetites for the metal’s key inputs have also fared well. The country imported 7.3 MMT of iron ore and 4.3 MMT of coking coal in May, up 12.6% and 29.9% YoY, respectively. Around half of this came from Australia, with most remaining volumes imported from Russia and Indonesia. The country exported 1.9 MMT of steel in May, increasing by 11.8% YoY. However, South Korea’s auto industry is facing a shortage in car components, with Hyundai Motors reportedly cutting production.

Overall, the logistical issues caused by the truck driver strike is likely to drive declines in steel production in the country in June. However, the build-up in inventories, coupled with weakening demand from the steel-hungry auto-sector may drive greater steel exports given an end to the strike, largely benefitting the Supramax segment.

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Japanese steel exports totaled 3.3 MMT in May, up 32.5% YoY. Japan’s exports have benefited from a weakened yen. The currency fell to ¥135.19 against the US dollar on Monday, a 24-year low. Unlike its counterparts in Europe and the US, the Bank of Japan has so far resisted tightening monetary policy in response to inflation. This could change in policy meetings later this week, with the central bank issuing a statement last Friday expressing concern about the currency’s rapid weakening. The weak yen has also contributed to high input costs for Japanese steelmakers which has been passed onto consumers, including shipbuilders.

Reflecting this, Braemar assessed prices for newbuild bulkers at Japanese yards increased by an average of 15.95% YoY in May. These high prices are likely reducing domestic steel demand, further driving the increase in exports. Japanese domestic vehicle sales, for example,  were down 16.7% YoY in May.