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South Korea is set to restructure its steel industry in response to rising pressure from cheaper Chinese products and high-quality Japanese steel. The Ministry of Trade, Industry and Energy is preparing a restructuring blueprint, expected by the end of the month, following recommendations from a task force of officials, academics, and consultants.
The plan calls for cutting production of commodity items such as rebar, thick plates, and flat steel, while boosting output of higher-grade specialty products. Companies failing to meet new standards for strength and durability could face mandatory cutbacks, shutdowns, or be pushed toward mergers. Officials are also considering exemptions to competition rules to coordinate capacity cuts.
Industry insiders estimate that about 40% of domestic mills may fail to meet upcoming benchmarks, with 10–20% at risk of closure. Blast and electric furnaces run by giants like POSCO are likely to be spared due to their efficiency and supply chain importance.
The sector’s downturn has been severe: POSCO’s Pohang Steel Works posted its first annual loss since 1973, and smaller players’ utilization rates have dropped below 80%. Imports from China and Japan continue to rise, while U.S. trade barriers are limiting exports. Analysts warn Korean steelmakers are stuck in a “sandwich trap”—unable to compete on cost with China or on quality with Japan.
To break out, Seoul aims to push producers toward niche, high-value products such as earthquake-resistant rebar, ultra-high-strength beams, LNG carrier plates, and alloys for defense and energy. A “steel co-prosperity fund” is also being considered to help stronger mills absorb weaker rivals and their workers, easing the transition.
Officials call the next five years a “golden time” to reset the industry, shifting focus from volume to value to stay competitive globally.
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