POSCO, Hyundai Steel, and Dongkuk Steel are fiercely vying to dominate the thick plate market. Hyundai Steel increased its production volume last year to put pressure on POSCO, and Dongkuk Steel is planning to cooperate with Japanese companies for quality enhancement. In addition, the shipbuilding industry is showing signs of recovery nowadays, signaling a higher demand than before.
According to industry sources, the thick plate manufacturing volume is expected to exceed local demand this year. The production capacity is 7.5 million tons for POSCO, 3.5 million tons for Hyundai Steel, and 3.4 million tons for Dongkuk Steel. Meanwhile, local demand is estimated at around 9.22 million tons this year. “It is almost sure that the supply will surpass the demand in 2014, even considering that the actual output has been somewhat less than the capacity,” said an expert, adding, “Approximately two million tons of imported thick plates will add to their difficulties in finding new clients, too.”
The domestic thick plate market was dominated by POSCO and Dongkuk Steel from the 1970s, and Hyundai Steel joined the race in the 2000s. Thick plates are used mainly in marine vessels and buildings and the demand has dropped recently due to the slumps in the construction and shipbuilding sectors.
Still, their combined production volume has been consistently increased as Hyundai Steel kicked off the operation of its third furnace last year. The steelmaker started to pose a threat to Dongkuk with its stable supply to the other subsidiaries in the Hyundai Group such as Hyundai Engineering & Construction and Hyundai Heavy Industries. Dongkuk Steel’s thick plate sales fell 44% from a year earlier in the third quarter of 2013, driving it to spin off the thick plate business unit for survival.
Dongkuk Steel is trying hard to sharpen its competitive edge. It is planning to reorganize its business focusing on high-value-added products such as those used in offshore plants. It signed a contract with JFE Steel, a global market leader, on December 16 to have its thick plate rolling technique transferred.
Their competition is likely to become even more intense as Korean shipbuilders are expected to work on more new ships from the latter half of this year. At present, POSCO is in partnership with Samsung Heavy Industries, Dongkuk Steel with Daewoo Shipbuilding & Marine Engineering, and Hyundai Steel with Hyundai Heavy Industries. However, few such alliances have been formed with smaller shipbuilders and offshore plant builders.