South Korean mini mills slash production amid falling prices, high costs

• Mini mills cut production, suppliers stare at falling prices
• Korea’s scrap sector struggles amid weak construction demand

Mysteel Global: South Korea’s ferrous scrap sector is facing a structural downturn despite high scrap self-sufficiency and declining imports. In 2024, EAF steelmakers produced 17.6 million tonnes (mnt) of crude steel, down 10% y-o-y from 2023, while total scrap procurement fell 13.2% to 18.18 mnt. Scrap imports dropped sharply from around 4.5 mnt in 2019 to just 2.04 mnt last year, pushing the scrap self-sufficiency ratio above 90%. However, this apparent strength is misleading, as the rise in self-sufficiency is mainly due to production cuts amid collapsing demand rather than market efficiency.

In a recent industry conference, Hanshin S.&, a major scrap dealer, describes the situation as “the darkest hour” for the industry. Survival-focused procurement and structural demand weakness, rather than temporary price drops, are the core challenges. The sector now requires a sustainable supply structure rather than relying on a rebound in scrap prices.

The primary reason for the downturn is the collapse in construction demand, traditionally the backbone of South Korea’s scrap consumption. Building permits and housing starts fell over 20% y-o-y during Q1 2025, while Q4 2024, the largest quarterly decline since 2018.

As a result, rebar and H-beam demand dropped nearly 12% in the first half of 2025, forcing EAF mini-mills to cut production sharply. Many mills operated at 30-70% capacity due to weak product prices and high electricity costs, while leading rebar producers extended shutdowns to stabilize market prices.

Scrap suppliers are bearing the brunt of the slowdown, with prices for light A scrap in Pusan at KRW 365,000/t-higher than last December but below the February 2024 average. Some dealers are resorting to exports to reduce inventories, but unfamiliarity with foreign markets and cash flow risks limit this option.

Major clients, such as Dongkuk Steel, have implemented historic shutdowns, further reducing scrap consumption.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.