Hyundai Steel to shut down Incheon rebar plant in April

Hyundai Steel Co. is set to shut down its reinforced bar plant in Incheon in April to trim output as steel bar prices are hovering near a four-and-a-half-year low, slipping below the breakeven point, according to industry sources on Thursday.

The planned suspension marks the first such move by the largest steelmaker in South Korea at its flagship manufacturing facility -- the country’s largest rebar plant -- since its founding.

Hyundai Steel has recently informed employees that it will suspend operations at the Incheon plant for one month, according to the sources.

It previously cut output by extending maintenance periods or undertaking unscheduled repairs.

Amid a prolonged downturn in the construction industry, rebar prices are remaining below the breakeven threshold of 700,000 won ($478) per ton, even during the traditionally robust March construction season.

Rebar is currently trading at 672,000 won per ton for standard SD400 10mm products, marking the lowest level since November 2020, when the price briefly touched 670,000 won.

DONGKUK STEEL TO SUSPEND REBAR SALES

Other Korean steelmakers have followed suit with output cuts and shipment halts.

Dongkuk Steel Mill Co., South Korea’s No. 2 steelmaker, has notified distributors that it will suspend rebar sales from March 27 through the end of the month.

The company has also decided to withhold shipments in April unless prices rise above 750,000 per ton, the minimum price it has set internally.

Daehan Steel Co. has halted sales since March 15, followed by Korea Steel Co. since March 17.

Korea Steel and Hwan Young Steel Industry Co. plan to operate their plants at half capacity in April, while YK Steel Corp. announced on Thursday that it would suspend shipments until early next month.

"Considering scrap metal prices and electricity costs, the breakeven price is between 700,000 and 750,000 per ton,” said a steel industry official.

There is little sign of a recovery in the steel industry. Several medium-sized builders have entered court receivership, while smaller construction companies are turning to low-cost imported steel.

According to the Construction Economy Research Institute of Korea, the domestic construction sector is expected to remain sluggish this year with declining investments.

Hyundai Steel began offering voluntary retirement packages on March 26 to employees aged 50 and over.

Write to Hyung-Kyu Kim and Jin-Won Kim at khk@hankyung.com

Yeonhee Kim edited this article.