Pohang, once a symbol of South Korea’s steel industry, faces decline as POSCO shuts down its 1st wire rod plant after over 40 years. Steel, petrochemical, and battery sectors all saw operating profits plummet by up to 97.5% last year. Experts urge unified political action to support struggling manufacturers.   The once-hot POSCO Pohang Steelworks No. 1 Wire Rod Plant in Pohang, Gyeongbuk Province, has cooled down and is now filled with a sense of desolation. Mr. A (60), who has worked here for over 40 years, recently met with a reporter from this newspaper and showed us the space where the last shipment of products was hanging. He, who is due to retire at the end of the year, stared at the empty space that used to be filled with 2-ton wire rod coils. This factory, which produced 700,000 tons of wire rod coils annually for tire cords (reinforcements), closed its doors in November of last year after producing its last coil. This is the third time since POSCO was founded in 1968 that the factory has been closed due to management difficulties. It is not just Pohang, the “city of steel,” that is cooling down. The three major core industries of domestic manufacturing, including batteries, petrochemicals, and steel, are all in dire straits. These industries are highly interdependent with upstream industries and are called the “roots of industry.” The three industries that suffered the worst recession ever due to high interest rates, economic recession, and low-price offensive from China until last year are now in a state of stagnation after being hit with a tariff bomb from the US this year. According to the analysis of the 2024 business reports of the top 100 manufacturers based on assets listed on the stock market by this newspaper on the 23rd, the average operating profit of the three industries last year was approximately 250 billion won, a sharp 66% decrease from the previous year (719.7 billion won). By industry, batteries (5 companies) decreased by 97.5%, petrochemicals (14 companies) by 64.5%, and steel (6 companies) by 46.4%, taking the top 3 in terms of operating profit decrease rate. This is in stark contrast to the 79.1% surge in the average operating profit of the top 100 manufacturers during the same period. As the three industries fall into crisis, the regional economies of Pohang and Yeosu Industrial Complex in Jeollanam-do are also taking a big hit. The return on equity (ROE), which shows the company’s ability to generate profits, is also worsening. The decline was particularly notable in petrochemicals (-8.5 percentage points), batteries (-6.2 percentage points), and steel (-4.9 percentage points). In capital-intensive industries, a long-term decline in ROE means that it is difficult to attract additional investment and is caught in a vicious cycle of deteriorating profitability. (ICE SEOUL)

Fonte notizia: DONG A ILBO