POSCO Delays Factory Maintenance to Maintain 'Full Operation'

'Rowing When the Water Comes In'... Steel Prices Rise Amid Surging Demand

[Asia Economy Reporter Hwang Yoon-joo] POSCO is planning to postpone the maintenance schedule of the Gwangyang Steelworks plant originally scheduled for March. This is due to a surge in demand caused by the boom in upstream industries such as automobiles and home appliances, which has intensified the shortage of materials across the market. POSCO is currently operating its steel production plants at full capacity to meet delivery deadlines.

According to the steel industry on the 26th, POSCO is considering postponing the maintenance schedule of the 3rd Cold Rolling Mill at Gwangyang Steelworks, which was planned for the second week of March, due to insufficient supply capacity amid the surge in demand.

POSCO's consideration to postpone the maintenance schedule is based on the judgment that the tight supply and demand situation may continue for some time. The 1CAL and 2CAL lines of the 3rd Cold Rolling Mill, which are subject to maintenance, have a total production capacity of 2 million tons. Since they produce steel products for automobiles and home appliances, the order volume is said to be higher compared to other facilities.

The recovery in demand from upstream industries has become visible since the second half of last year, as steel demand for automobiles and home appliances increased. Accordingly, iron ore prices have also been on the rise. Iron ore prices steadily increased from $92.97 in January last year, to $104.27 in July, and $128.02 in November. On the first day of this year, it recorded $161.8, and on the 15th, it soared to $172.19, surpassing $170 for the first time in 11 years since April 2010. Due to the sharp rise in iron ore prices, Hyundai Steel raised the price of hot-rolled steel for distribution by 100,000 KRW this month and announced plans to increase it by 70,000 KRW in February.

The steel industry expects market conditions to improve significantly starting this year. China's strong economic stimulus measures after COVID-19 have increased steel demand, and large-scale economic stimulus plans are also scheduled following the inauguration of U.S. President Joe Biden.

In particular, the export environment to the U.S. is expected to improve after the Biden administration took office. Previously, the World Trade Organization (WTO) ruled in favor of the Korean government in the 'Adverse Facts Available (AFA)' dispute between Korea and the U.S. Although the U.S. may appeal, the first-instance victory is expected to ease punitive tariff practices on Korean products for the time being. The steel industry, including POSCO, exports about 45-55% of its total sales, with the U.S. being one of the major export countries.

Park Sung-bong, a researcher at Hana Financial Investment, evaluated, "Since the Biden administration is expected to pursue restoring relations with the WTO, it will not ignore WTO rulings like the previous Donald Trump administration," adding, "The possibility of repealing 'Section 232 of the Trade Expansion Act' has also increased."

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