Dongkuk Steel shutting down plate mill on oversupplied market
Dongkuk Steel will shut down one of its two plate mills to cope with an oversupplied domestic market, it announced late on Thursday June 25.
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Its No 2 plate mill, which can produce plate at a rate of up to 1.9 million tpy at its Pohang works in South Korea’s south-eastern region, will be closed on August 1 this year for an indefinite period, the steelmaker announced in a filing with the Korea Exchange (KRX).
The move will see Dongkuk produce plate at just its 1.5-million-tpy facility in Dangjin city, in South Chungcheong province in the western part of the country.
It made known its plans to shut down the No 2 plate mill early last month.
“Capacity reduction is inevitable, [but] taking the [current] output [volume] into account, the total annual output will not be greatly affected if production is concentrated on the Dangjin plant,” the company noted.
Dongkuk, South Korea’s third-largest steelmaker, has been suffering for the past few years amid an oversupply of plates and shrinking demand from the shipbuilding and construction industries, the main buyers of its products.
It has seen its plate shipments steadily fall over the years, from 3.48 million tonnes in 2010 to 1.72 million tonnes in 2014.
Concentrating its output in Dangjin will allow Dongkuk to increase its capacity utilisation at the mill, raising production efficiency and profitability, it said.