Countermove
Korean steel companies are planning to make aggressive investments for business sustainability. The idea is to make preparations to keep the lead in the market while the business conditions are deteriorating at a rapid pace, with the supply glut caused by Chinese steel companies expected to continue for a while.
According to the result of a recent survey carried out by the Korea Iron & Steel Association, Korea steel makers are planning on capital expenditures of 4.1473 trillion won (US$3.8098 billion) for this year, 18.6 percent up from a year ago. The domestic and overseas investments scheduled for this year add up to 3.354 trillion won (US$3.0811 billion), 18.9 percent up from a year earlier, and 158.8 billion won (US$145.9 million), 11.3 percent up, respectively.
By business segment, 2.0279 trillion won (US$1.8629 billion) is to be invested in manufacturing facility renovation, repair, and maintenance. Another 1.7327 trillion won (US$1.5917 billion) will go to facility expansion, and 169.1 billion won (US$155.3 million) to R&D facility construction and management.
This year, Korean steel manufacturers are expected to spend 632.9 billion won (US$581.3 million) for R&D purposes. The amount is 4.7 percent higher when compared to last year. At the same time, the ratio of investment to sales is estimated to increase from 4.8 percent to 5.9 percent between 2014 and this year.