South Korean steel industry, which is reeling under pressure of lacklustre domestic demand and falling steel prices is planning to go for its restructuring. As per the market sources, BCG (Boston Consulting Group), a renowned consulting group has been assigned the task to draw a plan for the same.
As reported, the company has carried out its study and has revealed an interim report stating urgent need to carry out production cuts in country’s plate industry.
The HR plate industry which was flourishing during boom in country’s shipbuilding sector, is now suffering from huge losses and excess capacity in the wake of falling demand and cheaper imports from China.
BCG has advised in its report to shut down South Korea’s three out of seven steel plate manufacturing facilities in upcoming phases.
In Korea, POSCO operates four plates plants, while another steel major Hyundai Steel operates two plates plants and Dongkuk operates one plant combining the total production capacity to 12 MnT.
It is being anticipated that demand for steel plates in the country is likely to fall from 9.2 MnT in last year to 7 MnT in 2020.
Also speculations are rife that by 2020, orders from South Korean ship building companies will cut down by half against previous year and thus, plates production capacity shall be reduced by 4 to 5 MnT.
However, it is an interim report by BCG and will be revised thoroughly by KOSA (Korean Iron & Steel Association) as cutting plates production capacity by half will also lead huge employment losses.
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