Coronavirus Weighing on Steelmakers
The new coronavirus outbreak is now taking its toll on Korean steel manufacturers. Overseas factories of Korean companies such as POSCO and Hyundai Steel have suspended their operations. Amid a deepening recession in downstream industries such as shipbuilding and automobiles, their shutdowns are starting to lead to a drop in steel demand.
POSCO will stop operating its stainless steel plant “POSCO-ITPC” in Verona, Italy from March 26 to April 3. POSCO ITPC's production capacity is 40,000 tons per year.
The steelmaker’s four processing centers in India and Southeast Asia will also be locked down until March 31. This is because the governments of India, the Philippines and Malaysia have taken steps to contain the spread of the epidemic. POSCO-MKPC, a processing center in Port Klang, Malaysia, and POSCO-PMPC, a processing center in Tanauan, the Philippines, will be closed down until the end of March. POSCO’s processing centers in Delhi and Pune, India will also be shut down until March 31.
Hyundai Steel entered a shutdown following the operation suspension of the overseas factories of Hyundai Motor and Kia Motors. Hyundai Steel’s overseas factories are mainly processing factories that supply steel products to Hyundai Motor and Kia Motors. Hyundai Steel’s Alabama Steel Plate Processing Center in the United States is scheduled to go into a shutdown and operate only a few lines will run by the end of March. Its coil and steel pipe manufacturing plants in india will also stop during the same period. Its plants in the Czech Republic and Slovakia were run by essential personnel only in line with Hyundai’s and Kia's plant shutdown schedules.
Those in the Korean steel industry say that they will be able to offset the gap in production due to shutdowns by raising utilization rates in the second half but a bigger issue is sluggish demand. In fact, major global steelmakers including the world's largest steelmaker, ArcelorMittal, decided to cut production in North America as the novel coronavirus shuttered automobile factories. Currently, Korean companies are not considering reducing production, but say that if the current situation is prolonged, an adjustment will be inevitable.