Steel Production Facility to Be Reduced by 10 Percent for Next 10 Years

The steel producing countries around the world decided to reduce their steel producing facilities by 10 percent for next 10 years in order to adjust themselves to the overproduction of steel and the decline of steel price.

40 major steel producing countries including Korea, the U.S., the E.U. and Japan agreed to reduce their production capacity by 93.5-97.5 million tons by 2010 in the OECD high-ranking steel meeting during Dec. 17th and 18th in Paris, France. The reduction figure is equal to 9.5 percent of total world steel production.

With this agreement, Korea also should lessen a considerable amount of producing facilities including electric furnace. But positive impacts are expected for the Korean steel companies, such as the alleviation of the U.S.`s protective measures (Safeguard), which is scheduled to launch next February.

According to the reduction plan, the steel-making countries should cut their steel production by 61-65 million tons by 2003, and 9.5 million tons by 2005, and 23 million tons by 2010.

The OECD decided to hold the third steel meeting at the beginning of next February right before the United States finalizes its execution of the Safeguard in order to examine the U.S.`s protective measures and the process of facility reduction. And it will set another meeting for April after the U.S. announces its protective measures.

Yeon-Su Sin ysshin@donga.com