South Korean steel makers are adjusting output as their key clients – automakers and builders – remains in the doldrums from COVID-19 pandemic impact.

Hyundai Steel Co. will switch off hot rolled steel plant in Dangjin, South Chungcheong Province, during the whole month of June, the company said Tuesday. It is the first time that the company stopped hot-rolled steel mill since its activation from May 2005.

The plant produces 1 million tons annually, paltry against total steel production capacity of 24 million tons. But a full-month halt nonetheless underscores the difficulties that the country’s steel makers face amid plunging demand, said a market observer.

Hyundai Steel reportedly got virtually no orders in June.

The company’s management and labor union are planning to have talks over the future operation plan for the hot rolled steel plant, said a company official.

Posco, the country’s largest steel maker, also has pushed back its schedule for returning to normal production. The steel maker’s steel mill in Gwangyang, South Jeolla Province has been shut down since February for maintenance and remodeling works with a plan to resume operation on May 28. It has been upgrading the third blast furnace at the steel mill into a 5,500-cubic-meter furnace by investing 400 billion won ($328.7 million).

But Posco so far has not decided when to reignite the furnace at the Gwangyang steel mill. “We are now in the last stage of the construction for initial firing,” said a company official.

The steel maker upon releasing its first-quarter earnings results in April said it lowered this year’s production target to 34.1 million tons from its initial plan of 36.7 million tons.

Industry observers anticipate steel makers to resume production towards the end of this month with signs of recovery in global steel demand. News came out on Tuesday that three Korean shipbuilders are close to winning a $19.2 billion blockbuster deal from Qatar to build liquefied natural gas carriers.

Still, when steelmakers can return to normal remains uncertain.

Local auto giants Hyundai Motor Co. and its smaller sibling Kia Motors Corp. have been running production on and off at home and abroad after their sales at overseas market sank sharply since the pandemic.

Most of global credit rating agencies forecast global steel demand to remain subdued throughout this year due to the economic slump from the COVID-19 pandemic, said Park Sung-bong, an analyst at Hana Financial Investment, adding that they are especially skeptical about demand recovery in North America and Europe.

By Seo Dong-cheol and Cho Jeehyun

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