Korea's crude steel output seen recovering from two-year low

Crude steel production in South Korea this year is likely to climb out of the trough of the past two years to reach 64 million tonnes, the latest data from the Korea Iron & Steel Association (KOSA) show. But industry watchers say domestic steel market conditions remain sluggish, particularly in key consumption sectors such as construction and general manufacturing, and that a full-blown recovery in demand and thus, production is some way off.

The latest KOSA data show that between January and August this year, the country produced 42.81 million tonnes of crude steel which, annualized out, would make for a calendar 2026 total of around 64.2 million tonnes. Within the eight-month total, blast furnace makers POSCO and Hyundai Steel produced 31.01 million tonnes – essentially unchanged on year – while electric furnace steelmakers produced 11.8 million tonnes, some 600,000 tonnes higher on year, the KOSA numbers show.

Should this year's output top 64 million tonnes, the Korean mills will feel at least a little relieved and reassured. KOSA statistics show that domestic crude steel production last year was 62.23 million tonnes, lower by 2.2% from the 63.65 million level reached in 2024 and the lowest volume since the 58.9 million Korea produced in 2010.

In fact, Korean steel output peaked at 72.46 million tonnes in 2018 and has been generally sliding ever since, including a plunge to 67.08 million in 2020 amid the COVID pandemic and the resulting slowdown in global economic activity.

"The main cause for the production decline is the contraction in demand for bar and shaped steel due to the construction market downturn," industry daily Steel & Metal News commented. Electric-arc-furnace steelmakers are facing the burden of declining sales and lower equipment utilization rates, it observed, noting that domestic rebar sales – which once exceeded 10 million tonnes/year – have recently dropped to the 6 million t/y range and seem unlikely to recover markedly any time soon.

Indeed, KOSA statistics show that domestic rebar sales last year fell to 6.5 million tonnes – from 7.6 million in 2024 – and the January-August total for this year suggests a further fall to around 6.3 million for 2026 is possible.

"While crude steel production is expected to increase compared to last year, it is difficult to say that domestic steel demand has clearly recovered," SMN quotes a steel industry official as saying. "With the construction market continuing to be sluggish, production activities in major demand industries such as automobiles and shipbuilding, as well as the expansion of domestic steel sales, will affect future production volumes."

Written by Russ McCulloch, russ.mcculloch@mysteel.com

Edited by Alyssa Ren, rentingting@mysteel.com