Hyundai Steel, South Korea's second-largest steel manufacturer, has announced the indefinite suspension of operations at its Pohang Plant No. 2, effective June 7. This decision, driven by a prolonged and severe contraction in market demand, marks a significant escalation in the company's efforts to navigate a challenging global steel environment.

The indefinite shutdown comes after a period of reduced operations and previous attempts to postpone the closure. Last November, Hyundai Steel initially considered closing the plant but faced strong opposition from its union, leading to a temporary reversal and the implementation of a two-shift system. However, continued weakness in global demand, exacerbated by sluggish domestic market conditions, has ultimately forced the company's hand.

Pohang Plant No. 2, alongside the Incheon plant, is a key domestic production base for steel sections, primarily manufacturing H-beams. The closure highlights the severe strain on the industry, with steelmakers grappling with oversupply, falling prices, and increased trade barriers. In April, Hyundai Steel had already suspended rebar production at its Incheon plant for a month and initiated voluntary retirement programs for technical staff at the Pohang complex as part of broader restructuring efforts.

A company official stated that the suspension was "decided based on the production operation plan," emphasizing that "even if continuous labor is provided, a normal labor provision relationship cannot be established, and only the agreed suspension pay can be provided."

The move has significant implications for Hyundai Steel's workforce. The company accepted the union's request for normal attendance on June 9-10 for a meeting with union members before the suspension resumed on June 11. A crucial labor-management council meeting is scheduled for June 12 at the Pohang plant to address the shutdown of Plant No. 2, indicating ongoing dialogue and potential negotiations regarding the future of the affected employees and the facility itself.

Beyond the indefinite shutdown of Pohang Plant No. 2, Hyundai Steel is also actively pursuing the divestment of its machinery business division, operating at Pohang Plant No. 1. This division, which produces tracks for excavators, has also experienced deteriorating profitability. Reports indicate that Hyundai Steel is in negotiations with Daejoo KC Group for the sale of this business unit, further signaling a strategic shift to streamline underperforming assets and focus on core operations.

The broader context for these drastic measures includes a tough business environment marked by increasing protectionism. The company has been particularly affected by steel tariffs imposed by the U.S. under President Donald Trump, which are now set to double from 25% to 50% on all steel and aluminium imports.