POSCO Pohang Steelworks 1st Hot Rolling Mill Closed After 45 Years... Impact of Oversupply

Production of products including tire cords
Excessive production volume compared to global demand
Employees to be relocated by the end of this month

POSCO Pohang Steelworks' Line 1 Wire Rod Mill has ceased operations after 45 years and 9 months of continuous production and entered a 'shutdown' phase. This closure of Line 1 Wire Rod Mill is the second suspension following the shutdown of Pohang No. 1 Steelmaking Plant in July.

On the 19th, POSCO announced that it decided to close the Line 1 Wire Rod Mill after comprehensively considering factors such as the ongoing global steel oversupply, the influx of low-priced overseas steel products, and aging facilities.

POSCO Pohang Steelworks Wire Rod Mill 1 produced its last wire rod product on the 19th and ceased operations. Employees took commemorative photos with the wire rod mill in the background. Photo by POSCO

The global wire rod market had a production capacity of approximately 200 million tons as of last year, but actual demand was only 90 million tons. In particular, China holds a production capacity of 140 million tons, but due to sluggish domestic construction demand, it exports excess production at low prices to neighboring countries, leading to a decline in global wire rod prices.

In South Korea as well, the continued import of low-priced Chinese wire rods caused market prices to fall in tandem. Accordingly, POSCO decided to reduce supply to the price-driven low-cost market by considering the loss of competitiveness of aging facilities and decreased demand, and to restructure its business focusing on high value-added products.

The Pohang Line 1 Wire Rod Mill began operations in February 1979 and produced a total of 28 million tons of wire rod products over 45 years. The wire rods produced at this mill were used in everyday items such as nails and screws, as well as in high-strength automotive tire reinforcements like tire cords and bead wires.

POSCO plans to transfer the production of high-strength tire cords and welding rods, which were produced at Line 1, to Pohang Line 2 to 4 Wire Rod Mills. Employees of Line 1 are expected to complete the plant clearance by the end of November and then be reassigned through departmental transfers and redeployment.