Steel stocks are accumulating as construction iron stocks increase by 36.5% to reach 647,000 tons. During the same period, the decrease in domestic sales led to heavy plate stocks rising by 18.1% to 385,000 tons.
Despite shipbuilders and construction companies being major customers in the steel industry, they prefer cheap heavy plates. Indicators in the construction sector, including construction orders, permits, and starts, are all showing weakness. In the first quarter, the number of housing permits decreased by 22.8% to 74,558.
To maintain profitability, the steel sector is implementing production cuts. Due to reduced demand for construction iron, electric furnaces are now operated only at night. Hyundai Steel extended repair work on electric furnace equipment at its Incheon facility until the end of July and scheduled repairs for a 155-ton electric arc furnace at the Dangjin Steel Plant in September. Hyundai Steel aims to keep the operating rate of its long product plant at 60%.
Dongkuk Steel is also transitioning to a night production system to reduce costs. Production during hours of low electricity costs is expected to lower expenses. The operating rate of the Incheon electric furnace facility will be reduced from 80% to 60%.
Steel industry officials anticipate other steel companies joining production cuts. As the slowdown in the construction sector continues, steel companies are exploring various measures to stay afloat.
Comments
No comment yet.