South Korea announced an 80 trillion won support package for the steel sector

The package announced by the Financial Services Commission (FSC) will amount to a total of 80 trillion won (approximately $54 billion).

FSC Chairman Lee Eog-weon stated during a meeting attended by industry representatives and financial institutions that the recent Middle East crisis has increased logistics costs, caused disruptions in the supply chain, and further intensified pressure on the sector due to customs policies in the United States and the European Union. Lee noted that the impact on the steel sector may not remain limited to this field alone and could spread across the broader economy through related sub-sectors.

Of the announced support package, 25.6 trillion won will be provided through state-owned banks and policy lending institutions. Private financial institutions will contribute to the program by offering more than 53 trillion won in credit support. Authorities also indicated that the scale and scope of the program could be expanded depending on needs.

The government also announced new measures to ease financing pressure in the bond market. In this context, it was stated that repayment and secondary collateral ratios will be reduced for Primary Collateralized Bond Obligations (P-CBOs), supported by the Korea Credit Guarantee Fund, for small and medium-sized enterprises affected by the Middle East crisis.

According to official data, steel-related sectors account for approximately 370 billion won of the 900 billion won P-CBO financing planned for this year. It was also stated that, starting from June, the Korea Credit Guarantee Fund will directly issue P-CBOs, which is expected to reduce companies’ issuance costs by approximately 50 basis points.

The Financial Services Commission also announced that through the 1 trillion won Corporate Restructuring Innovation Fund, which is planned to become operational this month, investments will be made in the restructuring processes of companies operating in sectors such as steel, petrochemicals, semiconductors, automotive, display, and secondary batteries.