Hyundai Steel has decided to suspend operations at Pohang Plant 2 due to declining demand in the local construction industry and intense competitive pressure from low-priced Chinese steel. In a statement released on November 14, the company said that the decision was taken as the plant's operating rate has fallen to 10-20% and is no longer sustainable. The plant, which produces steel mainly for the construction industry by melting scrap iron in electric furnaces, has an annual production capacity of around 700,000 tons and is Hyundai Steel's second largest production facility after its flagship Dangjin plant.
The dominance of major players such as China, the European Union, and the United States in the global steel market leaves South Korean producers in a tough competitive environment. The entry of low-cost steel products, driven by China's slowing real estate sector, is putting local producers such as Hyundai Steel under price pressure. While Chinese producers are increasing their exports, South Korean firms are struggling to compete with these prices, especially in the construction sector, which accounts for the bulk of steel demand.
While the company continues to negotiate with labor representatives, the potential impact of the closure of Pohang Factory 2 on the local economy and related sectors is being closely monitored.
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