POSCO breaks ground on new steel plate plant to meet rising domestic demand
POSCO has decided to invest 1.8 trillion won to build a new steel plate plant with the capacity to produce 2 million tons of steel plates at its Gwangyang steel works, the steel giant announced July 23.
A ground-breaking ceremony took place at the steel plant complex on July 23 with some 300 company executives and local government officials present including Gov. Park Jun-yong of South Jeolla Province and POSCO Chairman and CEO Lee Ku-taek. When the new plant is completed in 2010, POSCO's steel plate production will reach 7 million tons per year, making it the largest steel plate producer in the world, the steelmaker said.
POSCO, now ranked fifth in the world in terms of steel production capacity, has decided to expand its steel plate production capacity to meet the increasing demand for the product at home by the shipbuilding and automobile industries. Shipbuilders have been importing 6 million tons of steel plates annually to meet its needs.
POSCO projects that the shipbuilding industry would have to import 12 million tons of steel plates by 2010 with the increase in cargo shipments from such economically-emerging countries as Russia, India and China, increasing the need for more container vessels.
The steelmaker also projects demand for steel plates by the non-shipbuilding sectors, such as oil exploration and various industrial plants, will also rise to 3.2 million tons per year by 2010.
Demand for steel plates in Korea stood at around 9.11 million tons in 2006 and rose to 10 million tons last year. This year, it is projected to rise to 13 million tons, while domestic production of the product by both POSCO and Dongguk Steel will stand at 7 million tons this year. Prices of steel plate have been rising at a rapid pace from 585,000 won per ton last year to 920,000 won per ton this year.
The shipbuilding industry has to import foreign steel plates due to a shortage in the supply of the steel product at home, although the prices of foreign steel plates are higher and the quality is not as good as domestically produced plates, industry sources said.
The shipyards will import some 6 million tons of foreign steel plates this year, far higher than the 1.06 million tons imported in 2001 and the 4.66 million tons last year.
POSCO now has three plants in its Pohang steel complex in Pohang, North Gyeongsang Province, turning out 4.3 million tons per year.
When the new steel plate production facility goes on line in 2011, the steelmaker's steel plate production capacity will shoot up to 7.25 million tons per year, up 70 percent from the current capacity, and it will bring POSCO's steel output total to 40 million tons per year making it the second-largest steelmaker in the world.
POSCO plans to plow some 6.6 trillion won into the expansion of its steel making capacity this year alone, the company said. The steelmaker wants to rationalize its current steel plate production plant in its Pohang complex, too, to produce as much of the steel product as possible in order to stabilize the skyrocketing prices of steel plates at home and also to enhance its competitive edge among the world's steelmakers.
Japanese steelmakers such as JFE and Nippon Steel have the capacity to produce 4.6 million tons and 4.55 million tons annually of steel plates, respectively. Yet, POSCO will still be the largest producer of steel plates in the world when the new steel plate plant is in operation in 2011.
Dongguk Steel and Hyundai Steel are scheduled to complete their steel plate production facilities, in November this year by Dongguk and in 2011 by Hyundai Steel, which are projected to cut prices of steel plates further and at the same time stabilize the supply of the steel product, meeting all domestic demand. nw
POSCO Chairman & CEO Lee Ku-taek