Citing harsh market conditions, South Korea’s POSCO closed its No. 1 wire rod plant at Pohang Steelworks, where it had been in operation for 45 years and nine months.

Per a report in BusinessKorea, the Nov. 19 decision stemmed from a prolonged global oversupply of steel and a resulting decline in the profitability of steel products. The plant, which began operations on Feb. 28, 1979, has produced a cumulative total of 28 million tons of wire rod products over its lifespan.

The closure, the article said, marks the second shutdown for POSCO in 2024, following the closure of the No. 1 Steelmaking Plant in July. The company said that related to continued global oversupply of steel, the influx of low-priced steel products from overseas, and the aging of the facilities. It noted that  in 2023, global wire rod plants had a production capacity of approximately 200 million tons, but actual demand was only 90 million tons. China, with a production capacity of 140 million tons, began exporting wire rods at low prices to neighboring countries due to a sluggish domestic construction market, leading to a steady decline in global wire rod prices. This oversupply and price decline have significantly impacted the profitability of wire rod production, prompting POSCO to reassess its operations.

The No. 1 Wire Rod Plant had a significant role in POSCO’s history, producing wire rods used as materials for nails, screws and high-strength tire reinforcements for automobiles. POSCO plans to shift the production of high-strength tire cord and welding rod for ships and automobiles, previously manufactured at the No. 1 Wire Rod Plant, to the No. 2 to No. 4 Wire Rod Plants. Employees who worked at the No. 1 Wire Rod Plant were to be reassigned to other departments within the company.

Looking forward, POSCO aims to reduce the proportion of low-priced products and focus its production capacity on high-value-added products such as high-strength bolts for automobiles (CHQ), spring steel, and bearing steel. This strategic shift is intended to improve profitability and competitiveness in the global steel market. POSCO’s future plans to restructure its wire rod production and sales strategy indicate the company’s efforts to adapt to changing market conditions and maintain its competitive edge.

Of note, POSCO opened a wire rod processing plant in the U.S. in 2017, with annual production capacity of 25,000 tons. POSCO invested $20.9 million, which at the time represented POSCO’s second largest overseas wire rod processing center, next to its center in Mexico.