Steel Industry Actively Pursues Domestic Reshoring to Produce High Value-Added Products

KG Dongbu Steel, Ajou Steel Selected as 2 U-Turn Companies, Other Steelmakers Also Inquiring

[Asia Economy Reporter Hwang Yoon-joo] Following Ajou Steel, KG Dongbu Steel is withdrawing its local factory in China and constructing a new production plant in Dangjin, Chungnam, marking the full-scale reshoring trend in the domestic steel industry.

On the 2nd of last month, KG Dongbu Steel announced its decision to liquidate its factory in Jiangsu Province, China, and return to Korea. The company plans to invest 155 billion KRW over three years on a 35,974㎡ site within the Asan National Industrial Complex in Dangjin, Chungnam, where its existing factory is located, to produce cold-rolled and coated steel products.

This represents the largest reshoring investment among companies returning to Korea since the COVID-19 pandemic.

Also, in May, Ajou Steel, located in Gumi, Gyeongbuk, liquidated its factory in the Philippines and is planning to produce steel sheets for electronics and construction materials in Gimcheon, Gyeongbuk, thus promoting reshoring and becoming the first domestic steel company to be selected as a reshoring enterprise.

The Steel Association explained that the domestic steel industry's keen interest in reshoring is due to the intensifying global oversupply and the expansion of import restrictions by countries worldwide to protect their steel industries. It is considered advantageous to return domestically to produce eco-friendly, high value-added steel products and supply them both domestically and internationally.

The Steel Association stated that besides KG Dongbu Steel and Ajou Steel, two to three medium-sized steel companies are also considering reshoring. Recently, the Ministry of Trade, Industry and Energy has enacted and implemented a reshoring subsidy notice (draft) that expands target areas and support items and raises support limits, which is expected to further invigorate reshoring in the steel industry.

According to the notice (draft), companies reshoring to Korea are eligible for reshoring subsidies of up to 30 billion KRW when constructing factories in local areas, and the support ratio for site, equipment, and relocation costs has been increased to 21-44%. Additionally, benefits such as employment subsidies, corporate tax reductions, tariff exemptions, smart factory package support, and restructuring consulting are provided.

Meanwhile, the Steel Association plans to continuously hold explanatory sessions on the necessity and support systems for reshoring targeted at the steel industry in cooperation with the Ministry of Trade, Industry and Energy and KOTRA, and to promote customized corporate consultations to assist the steel industry's return to Korea.

This content was produced with the assistance of AI translation services.