Unprecedented Gathering of Competitors
Dongkuk Steel Attends After Rejoining Steel Association
Survival Crisis Amid Construction Slump... Joint Response Discussed
Annual Rebar Production Expected to Fall Below 7 Million Tons This Year
It has been confirmed that the heads of major domestic rebar companies recently held a closed-door meeting to address the simultaneous stagnation in both supply and demand. This is the first time that competing companies have held a separate gathering of this kind. As the downturn in the construction industry?a key downstream sector?continues, it is assessed that companies pushed to the brink are now seeking ways to survive.
According to industry sources on May 15, the management of five electric furnace rebar producers?Dongkuk Steel, Korea Steel, Hanyoung Steel, Daehan Steel, and YK Steel?recently held an informal meeting at a hotel in Seoul, organized by the Korea Iron & Steel Association. Dongkuk Steel recently rejoined the association, and CEO Choi Samyoung was also present at the meeting. The companies reportedly discussed the prolonged slump in rebar demand, the contraction in production, and possible response measures. Some members also provided briefings on the construction market and economic outlook.
The industry views this meeting as a reflection of the heightened sense of crisis in the rebar market, which is facing its worst-ever situation. Companies have already begun to cut production as the slump in rebar demand drags on. According to the Korea Iron & Steel Association, domestic rebar production last year was 7.79 million tons, down 18% from 9.49 million tons the previous year. This year, cumulative production through March was only 1.73 million tons, raising concerns that annual output could fall below 7 million tons. Due to weak demand, rebar prices have remained stagnant at around 750,000 won per ton. The industry’s average break-even point (BEP) is generally known to be in the 800,000 won per ton range. As a result, Dongkuk Steel’s operating profit for the first quarter of this year (January to March) plummeted 91.9% year-on-year to 4.3 billion won.
The decline in rebar demand is largely due to the slump in the construction industry, which is a key downstream sector. According to the Korea Institute of Construction Industry, last month’s Construction Business Survey Index (CBSI) was 74.8, significantly below the baseline of 100. A CBSI above 100 indicates that more companies feel business conditions have improved compared to the previous month, while a figure below 100 means the opposite.
The industry plans to use this meeting as an opportunity to establish a joint response system and to discuss strategies tailored to future circumstances. An industry official said, “We plan to devise response measures focusing on supply-demand adjustment, export expansion, and cost reduction,” adding, “Cooperation within the industry is more urgent than ever in this prolonged slump.”
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