South Korean producers of cold rolled steel sheets (CR) have recently started their
production cuts for inventory adjustment due to the deterioration of related market conditions.
In order to cope with a seasonal slump in summer in demand for CR in the domestic market, most producers are reducing their CR
production by lowering the capability utilization rates of their facilities or conducting repair works of them.
The cold rolled producers that are repairing their facilities are Union Steel, Dongbu Steel and Hyundai HYSCO. Taking into consideration their fixed costs, they have been making every effort not to reduce their
production, but a recent increase in their inventory of products has made it hard for them to avoid
production cuts.
POSCO C&C and SeAH Steel have slightly reduced the capability utilization rates of their mills for the purpose of decreasing their product inventory. CR inventory at most steelmakers has recently increased from one-month supply to two-month supply. They are expecting that their inventory could decease fast when the seasonal low-demand period of August is over, but industry observers are predicting that the continuing large inflow of Chinese products will make it difficult for them to draw down their inventory at a fast pace in the near future.