Dongkuk Steel, operator of South Korea’s largest rebar production facility, has announced a temporary halt in operations at its Incheon plant for nearly a month.

According to a disclosure made on the 26th, the company will suspend all rolling and steelmaking processes at its Incheon site from July 22 to August 15. The move is expected to reduce rebar supply by approximately 200,000 tons. Dongkuk Steel cited “oversupply adjustment” as the official reason for the production suspension.

The Incheon plant is a key production base for Dongkuk Steel, accounting for 40% of its total revenue. It produces around 2.2 million tons of rebar annually—roughly 17% of South Korea’s total rebar output of 13 million tons. Equipped with two electric arc furnaces and two rolling lines, the facility focuses on manufacturing long steel products such as rebar, H-beams, and angle bars for construction and civil engineering applications.

However, prolonged stagnation in the construction sector has caused a sharp decline in demand, exacerbating an already chronic supply glut in the steel industry. Despite typically strong spring-season demand, no rebound materialized this year, signaling a deepening market slump.

The industry is also grappling with external cost pressures, including industrial electricity surcharge hikes and rising raw material prices, particularly for scrap metal. Korea Electric Power Corporation (KEPCO) raised industrial electricity rates by an average of 9.7% in October last year, significantly impacting steelmakers that rely heavily on electric arc furnaces.

Faced with these compounded challenges, Dongkuk Steel has opted for a strategic shutdown aimed at reducing electricity costs during the summer peak period and restoring supply-demand balance in the market. The decision reflects more than cost-cutting—it is seen as a measure to stabilize the industry ecosystem.

A Dongkuk Steel official stated, “Due to a construction sector downturn, we lowered our factory’s operating rate to 60% last year and to 50% earlier this year. With no signs of recovery, we’ve decided to bring that rate down to zero for the time being.”

The company emphasized that it will continue to supply pre-contracted volumes using its existing inventory, ensuring no disruption to customers.

“Depending on market conditions in August, we may have to consider extending the shutdown if oversupply persists,” the official added. “We can no longer delay decisions aimed at addressing excess inventory and market imbalance.”

Similar production cutbacks are taking place across the steel industry. Hyundai Steel, for instance, shut down its entire rebar production line at its own Incheon plant in April. At the time, the company clarified that it was not a routine maintenance shutdown, but a response to deteriorating market conditions. “Despite short-term losses, the move was necessary to stabilize supply and restore normal market operations,” Hyundai Steel said.

Dongkuk Steel’s complete shutdown stands as a symbolic indicator of the crisis gripping the domestic steel industry, as companies take increasingly aggressive steps to survive amid collapsing demand, oversupply, and rising costs.

Picture=Dongkuk Steel