November 21, 2024

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Posco employees at the Unit 1 wire rod mill pose with a banner marking the facility’s cumulative production of 28 million tons over 45 years, in Pohang, North Gyeongsang Province, Tuesday. (Posco Group)

South Korean steel giant Posco Group said Wednesday that it will shut down a wire rod mill at its steelworks in Pohang, North Gyeongsang Province, citing global oversupply.

The company explained that the decision reflects recent market challenges, including the ongoing global steel surplus, aging facilities, and the impact of China’s low-cost exports.

According to Posco, the global wire rod market in 2023 had a production capacity of approximately 200 million metric tons, while demand reached only 90 million tons. The company noted that China, with a capacity of 140 million tons, has exported wire products at lower prices amid weak domestic construction demand, driving down global prices.

This influx of cheaper imports has also pressured the domestic market in Korea, prompting Posco to shut down the Unit 1 wire rod mill and focus on high-value-added products such as cold-heading quality steel, spring steel and bearing steel, the company added.

The Unit 1 wire rod mill, which began operations in 1979, has produced 28 million tons of products over 45 years, including materials for nails, screws and high-strength tire reinforcements. Production of these items will shift to the company’s three remaining wire rod mills in Pohang.

“The domestic low-cost steel market is already dominated by imported products, so the impact of this adjustment will be limited,” a Posco official said, adding that the company aims to restructure its wire rod production and sales strategy.

Plant employees will be reassigned to other divisions after the closure. This marks Posco’s second facility shutdown this year, following its steelmaking plant at the same Pohang site in July.

By Hwang Joo-young (flylikekite@heraldcorp.com)