Posted on 09 Sep 2022
Domestic and export customers of South Korea's largest steelmaker, POSCO, are closely monitoring its progress on re-activating the Pohang steelworks after Tuesday's massive typhoon forced the company to halt all operations at the plant for the first time in its 49-year history.
In a statement Thursday, POSCO said it was aiming to operate the works' three blast furnaces – all hot-banked currently – sequentially from Saturday, the first day of Korea's Chuseok holiday weekend.
"The Iron and Steel Making substation, which suffered flood damage, will be normalized (on Thursday morning), and desalinated water facilities and LNG power plants will be normalized one after the other by tomorrow to supply steam and oxygen nitrogen necessary for the early operation of the blast furnaces. The goal is to normalize the Rolling Substation by September 10 to complete the power recovery at the steelworks," the statement said.
"Steelmaking plants will also be linked to handle the molten iron produced from the blast furnaces and will operate during the Chuseok holiday period," it added.
The Pohang plant produced some 16.9 million tonnes of finished steel last year – including 2.2 million tonnes of hot-rolled steel and 3.4 million tonnes of thick plates – and accounted for 24.2% of parent company Posco Holdings' total sales.
Local daily, Maeil Business, noted that as Pohang's revenue last year was about KRW 18.5 trillion ($13.3 billion), the company could lose at least KRW 50 billion for each day that operations are suspended.
POSCO's problems began early Tuesday morning after fierce Typhoon Hinnamnor made landfall near Pohang on Korea's southeast coast. Though POSCO had earlier taken the precaution of hot-idling two of its three blast furnaces, as Mysteel Global reported, the typhoon dumped an unprecedented 500 mm of rain on the city in just hours which – coinciding with a high tide – caused a river near the works to flood its banks and inundate the steelworks.
"The three blast furnaces which are the core facilities of the steel mill were not damaged (and) they could return to operation once electricity supplies resume," POSCO said in a regulatory filing. It noted that the recovery time of production lines including the hot strip mill that have been damaged due to the flooding was undecided, however.
As of Thursday, facilities located underground were still being repaired but that recovery has been progressing quickly with the help of eight large water pumps provided by the regional fire department and another 78 water pumps and emergency generators from three shipbuilding companies including Hyundai Heavy Industries, the company said.
The Maeil Business was less optimistic than POSCO management about the speed with which the plant could be revived, however, pointing out that programmable logic controller (PLC), a small computer programmed to carry out factory work, was also damaged by the typhoon.
"POSCO supplies most of its electricity through self-generation (which) means that there is a limit to the steelmaker's ability to resume operations with electricity from the state grid," it noted.
Several Korean media reports have noted that quantities of POSCO finished steel products, especially coils awaiting delivery, were damaged as flood waters filled the Pohang works' storage areas and these would have to be recycled as scrap – a concern echoed by Japanese steel industry insiders fearing the impact on their scrap export business, as reported.
But steel end-users both inside and outside South Korea such as automakers, appliance manufacturers and shipbuilders can perhaps be less concerned about the flood's impact on POSCO's ability to supply them.
In its statement, POSCO said that its similarly-huge Gwangyang works, located about 200kms southwest of Pohang, was unaffected by the typhoon.
"Therefore, a part of the slabs produced in Pohang will be transferred to Gwangyang for continuous processing," POSCO said.
The Gwangyang works is the purportedly the world's largest steelworks in terms of crude steel capacity, hosting four huge furnaces each over 5,500 cu m in inner volume and giving the works a total crude steel capacity of over 20 million t/y, as Mysteel Global reported.
"Steel demand in Korea has been soft and both works have the availability to lift output, so I don't see the stoppage at Pohang causing a shortage of steel in the country," a Japanese trader in Tokyo suggested.
However, it seems likely that typhoon recovery operations will delay POSCO's plans to overhaul some key rolling facilities at both works.
Local industry reports said POSCO had intended to start refurbishing the No.3 cold rolling mill at Gwangyang from September 21, and the No.3 continuous annealing line at Pohang from October 11, but this schedule is probably in doubt now.
Gwangyang staff will be required to lift production there while others will be seconded to Pohang for the clean-up, meaning fewer will be available to execute the revamps, Mysteel Global notes.
Source:Mysteel Global
