Dongbu Steel Reduces Hot Coil Output Target in 2010

Dongbu Steel of South Korea revised the hot rolled flat steel output plan downward to 1.6 million tonnes in 2010 compared with original 2.2 million tonnes. The firm adjusts the plan under slowing demand to increase the supply to the downstream operation from current 50% of hot coil production and decrease the third party shipment while the hot rolling mill operates at around annualized 2 million tonnes at Asan bay. The firm still targets 2.8 million tonnes of cold rolled products sales for the year and could increase hot coil purchase from planned 1.7 million tonnes.

Senior vice president Brian Yoo said to a reporter of Japan Metal Bulletin at the interview last week in Seoul the firm sees steel market condition gets worse toward second half of the year and could be slow through first half of 2011. The hot coil production decreases to around 2 million tonnes per year at 160,000 tonnes in June and planned 170,000 tonnes in July while the operation rate was 2.2 million tonnes pace in April.

The firm produced 750,000 tonnes of hot coil in January-June, of which the firm used around half at the downstream operations. Mr. Yoo said the firm plans to increase the hot coil use at the downstream operation up to 100,000 tonnes per month compared with 80,000 tonnes in June. The firm reduces the hot coil sales to third party in second half year while production will increase to 850,000 tonnes level in the second half. The firm tries to develop new hot coil buyers to stabilize the operation despite of the slow demand condition.

Mr. Yoo said the firm still plans to produce 2.8 million tonnes of cold rolled products in 2010. The firm tries to develop the market before the plan to expand the cold rolling capacity to annual 3 million tonnes in 2011. With the higher cold rolled production, the hot coil purchase volume could increase maximum 2 million tonnes for 2010 compared with planned 1.7 million tonnes when the own hot coil supply is just more than 800,000 tonnes.