The voluntary production cut by around 45 steel mills in China could help reduce price pressure and oversupply in the South Korean steel industry. This move is seen as positive, especially as Chinese factories face excess inventory and declining profitability.
Impact of Production Cuts on the South Korean Steel Industry
An industry official in South Korea stated: "The reduction of inventories and production is certainly favorable and positive for the South Korean steel industry." He also added that if China achieves a major reduction of around 200 to 300 million tons, it could have positive effects on steel producers worldwide, including South Korea.
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China's Steel Production Status and CISA Actions
The China Iron and Steel Association (CISA) has recently asked about 45 steel producers, including Baowu Steel Group, Ansteel Group, HBIS Group, and Shougang Group, to adjust their production and inventories based on actual orders and profitability. This action comes in response to declining demand in the housing and construction sector in China, which has led to increased inventories and reduced profitability in Chinese mills.
According to reports, China's crude steel production in the first half of 2026 decreased by 3% compared to the previous year, and steel consumption also fell by 3.6%. Inventories among the largest steel producers in China have reached 16.02 million tons, the highest level in three years.
While CISA has called for alignment of production with demand and profitability, an industry official in South Korea emphasized that the impact of these reductions depends on their scale and sustainability. He added: "The reduction of production and inventories by Chinese producers has been ongoing since around 2010, and although the amount reduced is greater than South Korea's total production, overall, this figure has not been very significant."
South Korea has also maintained its trade defense against Chinese steel imports. The Korea Trade Commission recently recommended that anti-dumping measures on imported H-beams from China be extended for another five years, including tariffs ranging from 28.23% to 32.72% for non-exempt suppliers based on current prices.
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