Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Steelmakers face triple whammy
Former U.S. President Donald Trump poses with members of Steelworkers for Trump during a campaign rally at Arnold Palmer Regional Airport in Latrobe, Pa., in this Oct. 19 photo. AFP-Yonhap
By Park Jae-hyuk
China-led oversupply, Trump’s return, labor disputes weigh on Korea’s key industry
Multiple risk factors are troubling the Korean steelmaking industry, which has been contributing to the nation’s construction sector and the manufacturing of cars, ships, machinery and consumer electronics over the past half-century.
Amid the oversupply of low-priced steel products from China and the likelihood of U.S. protectionist policies under the second presidency of Donald Trump, steelmakers' restructuring efforts to improve profitability have triggered severe backlash from their workers.
POSCO and Hyundai Steel suffered 39.8 percent and 77.4 percent year-on-year declines respectively in their third-quarter operating profits. Their deteriorating earnings have been attributed to excessive steel product imports from China amid the weakening domestic demand caused by the slowdown in the housing construction market.
Due to Trump’s warning of hefty tariffs on imports from China, concerns have grown further over the possibility of Chinese steelmakers exporting larger volumes of products to Korea and non-U.S. countries.
“There is a possibility of the incoming U.S. government hiking tariffs on imports from Korea or lowering quotas for steel product imports from Korea,” the Korea Institute for Industrial Economics and Trade said in a recent report.
In response, POSCO recently decided to unload its steel mill in China, while Hyundai Steel filed antidumping complaints in July against the import of low-priced thick steel plates from China.
Both companies have also reduced their outputs, prompting the city government of Pohang in North Gyeongsang Province to organize a task force to cope with the crisis in the steelmaking industry.
POSCO shut down one of its wire rod mills at its Pohang plant, Tuesday, ending 45 years of operation. This came after the steelmaker halted the operation of one of its steel mills at the plant in July.
“The lingering global supply glut, influx of low-priced steel products and the facility’s age led us to shut down the wire rod mill,” POSCO said in a press release.
Hyundai Steel's unionized workers hold a press conference in front of the steelmaker's plant in Pohang, North Gyeongsang Province, Friday, to protest the company's plan to shut down one of its plants in the city. Yonhap
Hyundai Steel is also considering shutting down one of its two factories in the city, following its apparent attempts to reduce output this year through monthslong repair of its other factories in Incheon and Dangjin, South Chungcheong Province.
However, Hyundai Steel’s workers from Pohang began to stage a sit-in in front of the company’s headquarters in Seongnam, Gyeonggi Province, Wednesday, to protest the proposed shutdown.
The steelmaker’s union also locked horns with management over wage negotiations.
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POSCO is on the verge of facing its first-ever strike since its foundation in 1968, as its worsening profitability made it difficult to accept the union’s request for an 8.3 percent hike in base wage and provision of bonuses equivalent to 300 percent of each employee’s monthly base wage.
Additionally, the steelmaker’s subcontracted workers held a press conference in front of POSCO Center in Seoul, Wednesday, urging the company to give them permanent positions in compliance with Supreme Court rulings in favor of the workers.