Hyundai Steel Incheon Plant Shutdown

Hyundai Steel is halting operations at its Incheon plant rebar production line for the entire month of April. The company explains that this production cut is a direct response to a worsening rebar market.

![Hyundai Steel Incheon Plant](https://pds.joongang.co.kr/news/component/htmlphoto_mmdata/202609/19/68b2136f-2f0b-4e25-a299-a88c8c72f235.jpg/_ir_400x224_/

Production Cuts and Overseas Expansion

Even as Hyundai Steel plans to build a new steel mill in Louisiana, USA, to produce automotive cold-rolled sheets locally, domestic steel mills are successively scaling back production in South Korea. High-end production is moving overseas, while domestic plants face economic stagnation and low-priced Chinese steel imports.

According to the steel industry on the 27th, Hyundai Steel will completely suspend operations at its Incheon plant rebar production line starting from the 1st of next month. This marks the first time since the company's establishment in 1953. A company official stated that the reduction is a measure responding to the worsening rebar market and will continue until excess supply in the domestic rebar market is resolved. Hyundai Steel produces 3.3 million tonnes of rebar annually, making it the top company with about a 30% share of the domestic rebar market. The Incheon plant has accounted for about 1.5 million tonnes of this production.

![Steel Industry Trends](https://pds.joongang.co.kr/news/component/htmlphoto_mmdata/202609/19/8901ce58-5d00-4e60-a62c-d6791987af90.jpg/_ir_400x224_/

Plant Suspensions and Market Pressures

Suspensions of steel manufacturing plants have been 본격화ing since the second half of last year. Last year, Hyundai Steel also suspended its structural steel production line at the Pohang Plant 2, and although operations resumed, utilization rates remain low. Posco also completely closed the No. 1 wire rod plant at the Pohang Works in November last year, a facility that produced semi-finished products for automobile components and construction steel materials.

Combined with a sluggish construction market and the inflow of low-priced Chinese products, domestic rebar prices have continuously declined. The price of rebar (based on SD400, 10mm), which was 1,106,000 KRW per tonne in March 2022, dropped to 676,000 KRW this month. This falls below 700,000 KRW per tonne, which the industry considers the production break-even point. The Construction Economy Research Institute of Korea analyzed that construction investment this year will also decrease by 2.1% compared to the previous year.

![Factory Operations](https://pds.joongang.co.kr/news/component/htmlphoto_mmdata/202609/20/8eaad1d7-c24b-4892-959f-abde3b22e574.jpg/_ir_400x224_/

Emergency Management and Industry Outlook

Hyundai Steel declared emergency management on the 14th and began preparing countermeasures. All executives had their salaries cut by 20%, and on the 26th, the company began accepting voluntary retirement for the first time since its founding, targeting all employees aged 50 and older. Hyundai Steel's operating profit last year was 159,500 million KRW, representing an 80% decrease from the previous year's 798,300 million KRW.

To avoid tariffs, building production facilities locally overseas is the only option. Following the Hyundai Motor Group, Posco is also reviewing plans to directly produce molten steel in the United States. Lee Ju-tae, head of the Future Strategy Research Division at Posco Holdings, stated on the 20th that the company will strengthen its position through an end-to-end localization strategy in high-margin markets like the United States. Currently, Posco only possesses downstream processing facilities in the North American region to process semi-finished products into final goods.

The steel industry's expansion of overseas investments is highly likely to accelerate the contraction of domestic jobs. Chang Sang-sik, head of the International Trade and Trade Research Institute at the Korea International Trade Association, noted that while steel mills do not scale jobs as massively as automobile factories, a reduction in domestic production could still raise concerns over industrial contraction.

Practical Tips

*   Monitor official announcements from major steel manufacturers regarding production facility adjustments.

*   Review industry reports from organizations like the Korea International Trade Association and the Construction Economy Research Institute of Korea for detailed market data.

Source

https://www.joongang.co.kr/article/25324225