Following production suspensions by leading South Korean automakers in India and Italy, major steelmakers like Posco and Hyundai Steel have decided to halt operations at their plants located outside the home country.
Global steel and stock markets have been ruffled by the COVID-19 outbreak, which has reflected in abrupt demand drop in the steel-consuming sectors. Mainly with a disruption in the functioning of downstream industries like shipbuilding, automobile and infrastructure. Concerns over a deepening global recession have also spread negative sentiment.
Posco suspends operations in Italy, India, Malaysia and Philippines
Posco has announced production halt at its stainless-steel plant located in Italy from March 26 to April 3. The plant, Posco ITPC in Verona, Italy has an annual production capacity of 40,000mt.
The company’s steel processing centres in Indian cities of Mumbai and Pune will remain shut till April 15 amid a complete 21-day lockdown announced by the government. Despite the Indian steel ministry’s attempt to allow steel production under essential services, dampened steel demand and a negative outlook for the next few months have forced mills to suspend production.
Posco-MKPC, a processing centre in Port Klang, Malaysia, with an annual capacity of 200,000mt and Posco-PMPC, a processing centre in Tanauan, Philippines, with over 600,000mt per annum capacity were earlier expected to reopen after March 31. But the suspension has been extended until a further official announcement.
Hyundai suspends US, India and Europe operations
Hyundai steel’s overseas factories mainly supply finished steel or HRC to automakers like Hyundai Motors and Kia Motors. These auto plants also remain shut, subduing the demand for Hyundai’s finished steel.
Hyundai steel has announced its Alabama steel plate processing centre in the United States will operate with only a few lines till the end of March with a possibility of further extension.
The steelmaker’s coil and steel pipe manufacturing plants in India remain suspended amid the lockdown and its plants in the Czech Republic and Slovakia have adjusted their outputs in line with Hyundai and Kia’s plant shutdown schedules and availability of limited workforce.
Steelmakers mull production cuts in South Korea
The rising number of COVID-19 cases globally has resulted in a drop in demand. Thus, steelmakers are concerned an oversupply situation may hurt steel prices, mainly since the output in South Korea did not fall significantly. To match the lowered global steel demand, mills have opted for production cuts. Global finished flat steel especially HRC prices have already dropped to a three-year low.