Facility Capacity for Oversupplied Rebar to Be Reduced... Investment in Promising Special Steel to Be Expanded

Ministry Announces 'Steel Industry Advancement Plan'
Global Oversupply Drives Industry to Historic Lows
Transition to 'High Value-Added and Low-Carbon' for Long-Term Competitiveness

As concerns over a crisis in the steel industry-a cornerstone of South Korea's manufacturing competitiveness-continue to grow, the government is moving to restructure the industry to secure its survival and strengthen its future competitiveness. For rebar, a product with low market-driven adjustment potential among oversupplied items, the government will reduce facility capacity. Meanwhile, for future high-potential products such as special steel, it will pursue bold, preemptive investments.

On November 4, the Ministry of Trade, Industry and Energy announced the 'Steel Industry Advancement Plan' in collaboration with related ministries during the Economic Ministers' Meeting and the Industrial Competitiveness Enhancement Ministers' Meeting.

Steel products are piled up at the export yard of Pyeongtaek Port in Gyeonggi Province. Photo by Kang Jin-hyung

According to the ministry, global steel supply increased from 440 million tons in 2021 to 590 million tons in 2024. In the third quarter of this year, steel exports fell by 24% compared to the previous year. Meanwhile, the penetration rate of imported steel rose from 26% in 2021 to 31% in 2024. Domestic demand, which had remained at 50,000 tons since 2010, also collapsed last year. A ministry official stated, "The domestic steel industry is facing a triple challenge of declining exports, increasing imports, and shrinking domestic demand. As a result, the business conditions for steel companies have deteriorated to historically poor levels, with signs of crisis spreading widely."

To proactively address oversupplied items, the government has set out the 'three principles for steel facility adjustment' as criteria. These principles consider product competitiveness and oversupply, companies’ voluntary facility adjustment plans, and the ratio of imports to domestic demand (import penetration rate). The ministry official explained, "The three principles were established based on the judgment that, as the steel industry enters a mature phase and global oversupply intensifies, it is no longer possible to maintain industrial competitiveness solely through generic products. They were derived through industry-led consulting, the intensive operation of a public-private steel industry competitiveness task force, and the collection of industry feedback."

◆Proactive Facility Adjustment for Oversupplied Items= In line with the three principles, the government will focus on creating conditions for facility adjustment for rebar, which is expected to face deepening oversupply and has a low import penetration rate. To this end, it will consider providing incentives such as allowing business restructuring under the Corporate Vitalization Act and related tax support, and if necessary, seek alternatives like a special steel law through consultation with the National Assembly.

Rebar. (Stock photo)

For sections and steel pipes, which are also facing oversupply but for which companies have facility adjustment plans, the government will provide support in connection with designating preemptive industrial crisis response areas. For other oversupplied items such as hot-rolled, cold-rolled, and galvanized steel sheets, the government will first prioritize responses to imported products, given their high import penetration rates, and then consider phased facility adjustments based on the effectiveness of these measures.

For special steel and electrical steel sheets, which are expected to maintain competitiveness and have favorable oversupply conditions, the government will pursue bold, preemptive investments. It plans to promote such investments by companies, designate special carbon steel as a new growth source technology, and support research and development (R&D) to proactively respond to demand.

◆Addressing Overseas Export Barriers and Unfair Imports= The government will also engage in bilateral consultations to respond to the United States' 50% tariff on steel and the European Union's proposal to convert safeguard measures to a tariff-rate quota (TRQ) system. It will continue to implement follow-up measures to resolve export companies’ immediate difficulties. In particular, it will steadily promote support measures such as a 400 billion won guarantee product to strengthen the steel export supply chain, and a 150 billion won secondary compensation program for steel, aluminum, copper, and derivative products, thereby improving policy finance accessibility for companies in these sectors.

The government will strengthen crackdowns on unfair imports. While implementing fair trade remedies such as anti-dumping, it will establish a collaborative system among the Korea Customs Service, the Ministry of Trade, Industry and Energy, and the Korea Iron & Steel Association to enhance enforcement through timely information sharing. The institutional foundation for effective import response will also be strengthened. From next year, steel imports will be systematically monitored through mandatory quality inspection certificates, and bonded area management will be reinforced in cooperation with related agencies. In addition, the number of steel sub-raw materials eligible for quota tariffs will be expanded from the current 7 out of 17 items.

◆Accelerating Investment in Promising Special Carbon Steel and Supporting Low-Carbon Process Transition= To secure a lead in the future market for special carbon steel, the government will establish an R&D roadmap and provide 200 billion won in support by 2030 to secure world-class technology and production bases. It will also consider, in cooperation with related ministries, providing tax benefits such as designating related technologies as new growth source technologies.

Support for promoting the transition to low-carbon processes will also be fully implemented. The government will continue efforts to establish low-carbon steel standards and certification systems, as well as to create a foundation for demand for low-carbon steel products. Fundamentally, to achieve a major leap in green competitiveness, the government will steadily promote the 'Korean Hydrogen-Based Steelmaking Demonstration Project,' which passed a preliminary feasibility study with a budget of 810 billion won in June this year. In cooperation with the Ministry of Climate, Energy, and Environment and other relevant ministries, it will expand support for hydrogen-based steelmaking, including preparing incentives to ensure a sufficient supply of economically viable clean hydrogen.

A ministry official stated, "The government aims to use this plan as a turning point for a new leap forward in the steel industry, proactively responding to the industry's structural crisis and fostering the enhancement of future competitiveness. We will continue to reflect feedback from the field to improve policy effectiveness and provide comprehensive support to ensure the steel industry can achieve sustainable growth."

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