As most listed steelmakers start announcing their Q2 and H1 financial results, market observers expect to notice overall that profitability has come under increasing pressure in the sector as a consequence of elevated iron ore prices coupled with under-pressure finished steel levels. 
 
Last week the first concrete report of this problem came from South Korea, where, according to Korean market participants, Posco and Hyundai Steel, like other steelmakers, are reportedly facing heavy pressure from the rising price of iron ore. 
 
After six months of negotiation, Posco and shipbuilding companies lead by Hyundai Heavy Industry reached an agreement to consolidate ship plate prices at the same level for the first half-year. Steelmakers had intended to lift prices by KRW 50,000/tonne ($42/ t), while the shipbuilding companies pushed back as they themselves are struggling financially.  
 
Hyundai Steel, the supplier for Hyundai Motor and KIA Motor, was also unable to increase its offer prices on the back of heavy resistance from its clients. 
 
The Kallanish KORE 62% Fe iron ore price index averaged $93/dry metric tonne cfr Qingdao over January to mid-July. Prices are currently hovering at around $120/t, without strong signs of correction. Very few in the market predicted such high iron prices this year and Posco itself, in its first quarter report, predicted that iron ore prices would average at $85/t over 2019.