South Korea's Crude Steel Production Likely to Fall Below 70 Million Tons for the First Time in 4 Years

[Asia Economy Reporter Park So-yeon] Due to the impact of the novel coronavirus infection (COVID-19), South Korea's crude steel production this year is expected to fall below 70 million tons for the first time in four years. The national ranking of crude steel production is also expected to remain at 6th place following last year.

According to the World Steel Association and the Korea Iron & Steel Association on the 19th, South Korea's crude steel production from January to September this year was 49.6 million tons, down 7.5% compared to the same period last year.

Looking at monthly production, it remained in the low 5 million tons range until July, then slightly increased to 5.8 million tons from August.

If this trend continues, the annual crude steel production this year is expected to be around 67 to 68 million tons.

Even considering an increase in production in the fourth quarter, which is the traditional peak demand season, it is unlikely to exceed 70 million tons.

This would be the first time in four years that annual crude steel production falls below 70 million tons since 2016 (68.6 million tons). Production from 2017 to 2019 was 71 million tons, 72.5 million tons, and 71.4 million tons respectively.

The contraction in crude steel production, an indicator of the steel industry's competitiveness, was due to steelmakers adjusting production as demand for steel decreased amid the slump in major upstream industries such as automobiles, shipbuilding, and construction caused by COVID-19.

In April, when COVID-19 peaked, crude steel production plummeted by 15.4% compared to the same period last year.

An industry official explained, "In the first half of the year, when COVID-19 was severe, production was reduced by about 10-15% in line with the decrease in demand, and in the second half, production is being flexibly maintained at a similar level."

The decline in South Korea's crude steel production was greater than the global average (-3.2%).

Compared to major countries, the decrease was larger than Russia's (-1.4%) but smaller than India's (-16.5%), Japan's (-19.1%), and the United States' (-18.8%).

China was the only major producer to show an increase, rising by 4.5%. This was because the Chinese government implemented domestic demand activation policies after COVID-19, leading Chinese steelmakers to collectively increase production.

South Korea's national ranking in crude steel production this year is expected to remain 6th, the same as last year. The top five are China, India, Japan, the United States, and Russia.

The steel industry expects production to recover somewhat from the fourth quarter as steel demand shows signs of recovery in line with the global economic recovery and raw material prices stabilize.

The World Steel Association recently forecasted in a report that steel demand next year will increase by 4.1% compared to this year, reaching 1.795 billion tons.

This is an upward revision from the forecast released in June (1.717 billion tons), reflecting that the global economic recovery and demand improvement, centered on China, are progressing faster than expected.

An industry official said, "While it is true that the business conditions are gradually improving, uncertainties such as the resurgence of COVID-19 remain, making it difficult to predict how quickly the recovery will proceed."

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