Pohang Steelworks Halted After 49 Years... Industry Struggles with Triple Crisis, Adding Insult to Injury

Sequential Restart from the 10th
Estimated Damage in Japan 40 to 50 Billion
Chain Impact on Related Industries Unavoidable

On the 7th, employees at the Pohang Steelworks' 3rd continuous casting plant, swept by Typhoon Hinnamnor, are shoveling out the mud that flooded in. Photo by POSCO

[Asia Economy Reporter Choi Seoyoon] Pohang Steelworks, Korea's representative industrial facility, which halted all production processes for the first time in 49 years due to the aftermath of Typhoon Hin Namno, has overcome the shutdown crisis. POSCO plans to sequentially operate three blast furnaces starting from the 10th.

If normal operations can resume as scheduled, POSCO is expected to avoid losses amounting to several hundred billion won. However, if disruptions occur, a chain reaction of damage to related upstream and downstream industries, already suffering from the triple crisis of ‘high inflation, high interest rates, and high exchange rates,’ is feared.

According to POSCO on the 8th, Pohang Steelworks plans to sequentially operate the three blast furnaces, which have been on a wind stoppage (suspension of air injection to the blast furnace for heating) for three days, starting around the 10th. The wind stoppage period for blast furnaces is known to be around five days. Previously, from the 6th, the operation of the three core blast furnaces was temporarily suspended due to flooding caused by Typhoon Hin Namno.

POSCO restored the submerged Seongang Substation to normal operation by the morning of the same day and plans to normalize the dam water treatment facility and LNG power generation by the 9th to supply the steam and nitrogen oxide necessary for blast furnace operation.

The industry estimates that the damage caused by this operational halt could reach 40 to 50 billion won per day. In the worst-case scenario, sales losses could amount to several hundred billion won. A steel industry official said, "Blast furnaces must operate 24 hours a day. Maintaining a consistent internal environment such as gas and temperature is crucial, and even if restarted after several days of stoppage, it will not be easy to restore the original blast furnace condition."

However, if recovery work is delayed, it could cause enormous costs and significant ripple effects in the steel industry. A representative example is stainless steel. Pohang Steelworks is the only stainless steel production plant in Korea. Stainless steel produced at Pohang Steelworks is supplied to companies like Dongkuk Steel and Hyundai BNG Steel for processing and sales. If this process is interrupted, secondary and tertiary sales losses may occur.

POSCO dealerships are currently waiting for POSCO’s damage estimates and operational recovery plans without taking any special measures. A POSCO dealership official in Pohang, Gyeongbuk, said, "The water has not yet receded, so we cannot accurately assess the damage and are waiting. There are no immediate orders before the holidays."

POSCO Chairman Choi Jung-woo has also launched full support and recovery efforts. On the 6th, when flooding damage occurred, he visited Pohang Steelworks to inspect the flooded areas around Naengcheon, the second hot rolling mill, the substation, and employee safety, and chaired an emergency countermeasure meeting on-site. Chairman Choi ordered, "We must provide full support and response at the group level for flood recovery." A ‘Typhoon Disaster Recovery Task Force (TF)’ was also formed, led by Vice Chairman Kim Hak-dong, including executives related to facilities, production and sales, technology, and safety.

Another steel industry official said, "Because this is an unprecedented situation, it is impossible to predict the restart timing or damage scale. Since orders had sharply declined in the third quarter, there may be some capacity to respond."

Typhoon Hinnamnor, the 11th typhoon, brought heavy rain, causing flooding inside the POSCO Pohang Steelworks in Nam-gu, Pohang City, Gyeongbuk, on the morning of the 6th. [Image source=Yonhap News]

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