Unprecedented weak demand for finished steel products globally has forced Hyundai Steel to put its electric arc furnace (EAF) plant in Dangjin on the block, according to local media. The Korean steelmaker plans to sell the EAF hot-rolling mill and treat other unsold equipment as scrap. The plant is a major producer of hot-rolled steel sheets.
In June, Hyundai Steel shut its EAF in Dangjin as orders reached near-zero levels. Dangjin plant is Hyundai’s integrated steel works in the west coast of South Korea equipped with state-of-the art steelmaking facilities. The plant, operational since 2005, produces hot-rolled steel sheets, thick plates, rebars, cold-rolled steel sheets and galvanized steel sheet.
Hyundai Steel has been reported consecutive quarters of net losses due to low demand from construction and auto sectors amid high iron ore prices. The company has been optimising it production to match weak demand outlook and has tweaked its product mix with a focus on premium product sales while diverting products from the construction sector to expand shipbuilding sales. The company plans to focus on its blast furnace business and produce high-end products including marine thick plates and automotive plates.
Higher scrap prices in the international market have severely narrowed the operating margins of many electric furnace-based hot rolling plants in South Korea. Low demand for long products from the construction sector in Korea due to the COVID-19 pandemic has further deteriorated margins of EAF mills.