Posted on 10 Dec 2024
South Korean steelmaker Hyundai Steel has temporarily suspended plans to shut down operations at its Pohang No.2 plant, in response to significant opposition from the government and labour unions, Kallanish notes.
This decision has added complexity to Hyundai Steel's ongoing operational challenges, with the company emphasising its commitment to ongoing negotiations aimed at ensuring employment stability.
Its Pohang facility, which has an annual crude steel capacity of one million tonnes and a small sections steel rolling capacity of 700,000t for construction use, has been operating at 10-20% of its capacity during 2024.
According to local media Aju News, the plant's steel production has declined from 680,000t in 2022 to just 510,000t this year, and rolling output has dropped from 390,000t to 230,000t. Meanwhile, the number of operating days has fallen from 304 days to 228 days. Manufacturing costs have therefore increased from KRW 990,000/t ($732) to KRW 1.13 million.
The poor performance is largely attributed to the aggressive pricing strategies of Chinese steelmakers, who have flooded the market with low-cost products in response to sluggish demand in China's domestic real estate sector. This has directly impacted South Korean steel producers, including Hyundai Steel, and exacerbated the difficulties they face.
Additionally, Hyundai Steel noted that the ongoing economic recession has further weakened the performance of South Korea's construction sector, which has been a key consumer of steel products.
In response to these challenges, Hyundai Steel is focusing on boosting its competitiveness by meeting the growing demand for high-value-added steel products and developing carbon-reducing solutions.
Meanwhile, the mayor of Pohang convened an emergency meeting last week to address the ongoing challenges facing the steel industry and discuss solutions. The mayor also visited the National Assembly in November to seek support, advocating for measures to help South Korean steelmakers navigate the current crisis. These include subsidies for small and medium-sized enterprises, reductions in industrial electricity prices, and expedited handling of anti-dumping cases.
Source:Kallanish
