The South Korean government is considering imposing a provisional anti-dumping duty of up to 38% on Chinese hot-rolled steel plates, which are steel plates with a thickness of 6 millimeters or more.
However, the steel industry views this measure as having a limited impact on the market. One of the main consumers of hot-rolled steel plates, the shipbuilding industry, is less affected due to the bonded factory system, which allows the use of Chinese hot-rolled steel plates without incurring the duty.
According to industry sources, the S. Korean steel and shipbuilding industries are currently negotiating hot-rolled steel plate prices. These negotiations occur twice a year, with the current round having started in Sept. 2024.
In the second half of 2023, the price of hot-rolled steel plates was around the mid-900,000 won ($629.10) range, but it slightly dropped to the low $629 range in the first half of 2024. The steel industry says that the hot-rolled steel plate sector is losing money and needs price increases to break even.
On the other hand, the S. Korean shipbuilding industry doesn’t have a reason to raise domestic steel prices because it can use Chinese hot-rolled steel plates in bonded zones without paying the duty. Hot-rolled steel plates make up about 20% of the cost of building a ship.
The S. Korean steel industry has been significantly affected by the influx of low-priced Chinese steel products. In 2024, POSCO Holdings' steel division reported an operating profit of approximately $1.1 billion, a 36% decrease from the previous year.
Similarly, Hyundai Steel’s operating profit fell by 80% to approximately $111.4 million, and Dongkuk Steel’s operating profit decreased by 57% to about $71.6 million during the same period.
The current price of Chinese hot-rolled steel plates is around $524 per ton. If the maximum duty is imposed, the price would exceed that of domestic products, which are priced at around $629 per ton.
Hot-rolled steel plates make up about 15% of the steel industry’s product mix, so an increase in their price would improve the industry’s profits. However, the shipbuilding industry’s use of bonded zones means that the duty would have minimal impact on it. The utilization rate of bonded factories in the shipbuilding industry is about 92%.
Consequently, steel-producing cities such as Pohang, Gwangyang, and Dangjin are urging the government to implement support measures. These cities have jointly requested that the government designate them as areas for responding to industrial crises and provide financial support, tax incentives, and long-term measures for technological development to enhance competitiveness.
Pohang city officials have also proposed a domestic steel usage quota for the construction industry, one of the major consumers of steel products. A city official noted that while it is not possible to mandate the use of S. Korean steel, the proposal aims to encourage the use of domestic products by focusing on construction-related associations. The city is also pursuing subsidy support through the enactment of a special law to strengthen the competitiveness of the steel industry.
The official added that there is a sense of crisis as the local economy is significantly weakening due to the closure of steel plants and the reduction of operations. “There are 28,000 workers in Pohang’s steel industry,” the official said. “With the shutdown and closure of steel plants, there is a growing sense of crisis as the local economy is significantly weakening.”
In Pohang, POSCO’s No. 1 blast furnace was closed last year, and the operation of the 1st Steel Works was suspended. Hyundai Steel has also reduced operations at one of its Pohang plant, and Hyundai’ Steel’s Dangjin Steel mill has decided on its first-ever workplace closure since the company’s founding.
