South Korea’s crude steel production in 2020 is expected to fall below the 70mn mt mark for the first time in four years (since 2016) due to the disruption caused by the COVID-19 pandemic, according to Korean Iron & Steel Association (KOSA). The association estimates that full-year steel output to range from 67-68mn mt in 2020. Despite this, steel demand is expected to rise significantly in Q4.
The country’s crude steel output was recorded at 71.4mn mt in 2019, 72.5mn mt in 2018 and 71mn mt in 2017, which could dip below 70mn mt for the first time in 2020.
During the first three quarters of 2020, crude steel output in South Korea stood at 49.6mn mt, down 7.5pc from a year earlier, according to KOSA and the World Steel Association. In a recent report, the World Steel Association forecast global steel demand to reach 1.795bn in 2021, up 4.1pc from this year.
Production ramps up on government stimulus
Many steel mills have decided to return to normal production levels as demand is expected to rise. The government has also announced a financial stimulus to support ramping up production by these companies, which increase total production in Korea.
In early November, KG Dongbu Steel disclosed its plans to build a new plant worth KRW155bn ($140mn) within three years. The facility will supply cold-rolled and plated products in Dangjin. The company decided to closure at its plant in the Jiangsu province, China.
Also, South Korean Aju Steel decided to liquidate its plant in the Philippines in May and produce steel sheets for electronics and dry materials, domestically.
KOSA also highlighted that in order to encourage steelmakers, the South Korean Ministry of Trade, Industry and Energy recently announced a U-turn subsidy under which up to KRW30bn ($30mn) in subsidies will be given to companies that shift their production to South Korea. The government will also cover up to 44pc of the company’s costs towards site acquisition, construction and relocation of plants.