Dongkuk Steel to Close Pohang No.1 Plate Mill

Dongkuk Steel announced on Thursday the firm closes No.1 plate mill at Pohang plant in June. The firm reduces plate production capacity by annual 1 million tonnes through the closure of 22-year old mill. The capacity decreases to 3.4 million tonnes including Pohang No.2 mill and Dangjin mill. The firm tries to shift to high valued products and to improve productivity through the restructure of commodity grade mill when South Korean plate market shifts to high grade products for large vessels, marine structures and line pipe.

Pohang No.1 plate mill, which started operation in 1990, made around 700,000 tonnes of plate at in 2011. The mill planned 400,000-500,000 tonnes of production in 2012. The firm decided to stop the operation in June 10 for closure process under shrinking demand.

The firm has studied potential scale down or closure of Pohang No.1 plate mill since the firm launched new plate mill in Dangjin in 2010. The firm expected business performance of old Pohang No.1 mill with lower productivity could be poor due to higher production cost and the commodity grade main products mix.

The firm tries to improve the profitability by focusing the high grade products at new Dangjin mill and Pohang No.2 plate mill, which is converted to make higher grade products. The firm also expects the closure contributes to domestic oversupply situation when the domestic market is expected to be 4 million tonnes of oversupply.