Hyundai Steel's Strategic Shutdown Amid Declining Demand for Rebar
In response to plummeting demand for rebar driven by the ongoing slowdown in the domestic construction sector, Hyundai Steel has announced temporary shutdowns across several of its production facilities. As of May 2025, the company has decided to halt the operations of its rebar, steelmaking, and rolling lines at the Pohang Plant 1, and Incheon Plant 2, with shutdown periods spanning from May 13 to May 31, 2025. These closures are a part of a broader strategy to cope with the prolonged downturn in construction activity in South Korea, coupled with competitive pressures from low-cost steel imports from China.
Shutdowns and Production Cuts
The shutdowns will affect Hyundai Steel’s production capabilities, particularly for rebar, a critical product in the construction sector. The Pohang 2 plant has already ceased operations, and Incheon Plant 2, a smaller facility, has been out of service since September 2024. The company has announced that its overall rebar production for January 2025 will be reduced by about 70,000 metric tons, primarily due to the reduced output at the Pohang, Dangjin, and Incheon plants.
The temporary closures at Pohang Plant 1 from May 22 to May 31 will further exacerbate this situation, with production lines in the steelmaking and rolling sectors being halted. These plants, critical to Hyundai Steel’s output, are set to reopen around June 3, 2025, once the Lunar New Year holidays end and the company resumes normal operations.
Impact of the Construction Slowdown
The main reason behind these significant shutdowns is the declining demand for rebar, which is heavily tied to the stagnation in South Korea’s construction industry. As a key material for construction projects, rebar typically experiences stable demand during periods of high construction activity. However, due to extended downturns in the domestic housing and infrastructure sectors, Hyundai Steel has seen a sharp decline in orders. This trend has significantly impacted the company’s production volumes and necessitated the shutdown of its facilities.
A Hyundai Steel official commented on the situation, noting, “The demand for rebar is plummeting due to the prolonged downturn in the domestic construction industry. As a result, we have decided to shut down some of our plant facilities ahead of the Lunar New Year holidays. We expect to cut rebar production by about 70,000 metric tons in January alone.”
Rising Pressure from Low-Cost Imports
In addition to domestic economic challenges, Hyundai Steel faces mounting pressure from Chinese steel imports, which have significantly impacted the competitive landscape for South Korean steel manufacturers. The Pohang Plant 2 shutdown is seen as a move to boost operational efficiency and productivity in response to low utilization rates driven by this influx of cheap steel from China. These imports have made it increasingly difficult for Hyundai Steel to maintain profitability in certain product lines, prompting the company to adjust its production strategy.
Looking Ahead: Further Cuts Likely
As the construction industry in South Korea shows no immediate signs of recovery, Hyundai Steel is likely to continue cutting production in the coming months. If the situation persists, further reductions in rebar output may be inevitable, especially given the continuing pressure from low-cost steel imports and a challenging domestic economic environment.
The company is closely monitoring these developments and preparing for additional production cuts if demand does not rebound in the near future. A Hyundai Steel spokesperson added, “If the construction economy does not revive, we will likely have to implement further production cuts in the coming months.”
