[Ferro-Alloys.com] Gov't rolls out strategy to restructure, future-proof cooling steel industry

Facing plummeting exports, a glut of global supply and slumping domestic demand, the government on Tuesday rolled out a comprehensive strategy to restructure and future-proof its struggling steel industry — long considered the backbone of the nation's manufacturing sector.

At an economic ministers' meeting, the Ministry of Trade, Industry and Energy unveiled its “Steel Industry Advancement Plan,” built on four pillars: facility restructuring, trade response, high value-added and AI-driven innovation and the green transition.

Korea’s steel industry has been deteriorating. As of the third quarter this year, steel exports fell 24 percent on year, while the share of imports in domestic consumption — known as the import penetration rate — rose from 26 percent in 2021 to 31 percent last year. Domestic demand, which had hovered around 50 million tons annually since 2010, fell below that threshold last year amid a slump in the construction sector.

“The survival and future competitiveness of steel — often referred to as the ‘rice of industry’ — require urgent structural reform,” the Industry Ministry said. “The plan was formulated based on consultations with a public-private task force and feedback from industry stakeholders.”

The government designated rebar — a product facing weakened competitiveness — a key target for production cuts among oversupplied steel items, citing its low import penetration rate of around 3 percent and a lack of voluntary capacity adjustments by domestic producers. Authorities plan to encourage voluntary restructuring efforts while considering tax and regulatory incentives.

For other products like structural steel and steel pipes, companies with their own restructuring plans may receive support through designation as pre-emptive industrial crisis response zones. For products such as hot-rolled, cold-rolled and galvanized steel sheets, the government will first address rising imports and then consider gradual production cuts.

High-value-added products like electrical steel and specialty steel will receive expanded research and development (R&D) support and may be designated as core technologies for future growth.

To counter rising export barriers — including the United States’ 50 percent steel tariff and the European Union’s review of tariff-rate quotas — the government will strengthen bilateral consultation channels. It also pledged to implement a 570 billion won ($396.5 million) support package announced in September, which includes 400 billion won in export supply chain guarantees, 150 billion won in interest subsidies and 20 billion won in emergency loans.

To block the influx of unfair imports, the government will tighten crackdowns on origin fraud, enhance trade remedy procedures and enforce mandatory mill test certificates while updating anticircumvention measures against dumping.

A 200 billion won R&D road map will also be rolled out for specialty carbon steel used in the shipbuilding, automotive, defense and aerospace industries. The goal is to increase Korea’s global share of specialty steel production to 20 percent by 2030 — surpassing Japan’s 17 percent and approaching Germany’s 38 percent.

The government also plans to drive innovation in steel manufacturing by applying AI to production processes and developing AI models tailored specifically for the steel industry.

Additionally, the government will push ahead with an 810 billion won “Korean-style hydrogen-based steelmaking demonstration project” and designate major steel production hubs — including Pohang, Gwangyang and Dangjin — as industrial crisis response zones to mitigate local economic shocks.

An Industry Ministry official said the plan aims to be “a turning point for a new leap forward” for Korea’s steel industry.

Separately, the ministry signed a memorandum of understanding with Posco, the Industrial Bank of Korea and the Korea Trade Insurance Corporation on Tuesday to launch a steel export supply chain guarantee program. The deal includes preferential terms such as a 2 percentage point interest rate cut and reduced guarantee fees, from 1 percent to 0.7 percent.

• [Editor:tianyawei]