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Photo = Yonhap news |
[Alpha Biz= Kim Jisun] As the economic downturn deepens across the steel industry, Dongkuk Steel has joined POSCO and Hyundai Steel in halting operations at some of its production facilities. Notably, Dongkuk Steel is suspending operations at its Incheon plant — the largest rebar production facility in South Korea — marking the first shutdown since the plant opened in 1972.
On May 26, Dongkuk Steel announced in a regulatory filing that it will temporarily halt operations at both the rolling and steelmaking mills of its Incheon plant from July 22 to August 15. The 25-day shutdown affects a key production base that accounts for approximately 40% of the company’s revenue. The facility produces about 2.2 million tons of rebar annually, primarily supplying domestic construction sites.
The temporary shutdown stems from a supply glut caused by the ongoing downturn in the construction sector. According to the Korea Construction Industry Research Institute, construction orders — a leading indicator of construction activity — fell 16.6% year-over-year in 2023, marking a steeper decline than during the 2008 financial crisis.
Korea’s rebar market has faced sustained price declines and cutthroat competition, leading to mounting losses across the industry. Hyundai Steel, the nation’s largest rebar producer, also closed its Incheon plant for one month last month due to collapsing demand and rising imports of low-cost Chinese rebar. The wholesale price of 10mm rebar dropped from KRW 750,000 per ton in October 2023 to KRW 670,000 by the end of December, and has remained weak in 2024 despite a temporary rebound last month.
POSCO, Korea’s leading steelmaker, also shut down its No. 1 wire rod mill at the Pohang Steelworks last November after more than 45 years in operation. The facility had produced materials for nails, screws, and high-strength tire reinforcements. POSCO cited declining domestic demand and increased competition from Chinese imports as reasons for the closure. The global wire rod market, like rebar, remains in oversupply, with an estimated annual production capacity of 200 million tons versus actual demand of just 90 million tons in 2023.
AlphaBIZ Kim Jisun(stockmk2020@alphabiz.co.kr)
