Korea, South - 2009 July 5

Senior South Korean and Chinese government and steelmaking officials gathered in Seoul on Friday to discuss bilateral cooperation in a bid to deal with the global slowdown of the steel industry. At the meeting, South Korean delegates called for their Chinese rivals to refrain from increasing capacity, warning it could lead to an oversupply of steel products. "South Korean has expressed its deep concern about Chinese steelmaker overcapacity ," the Korea Iron and Steel Association said in a statement. South Korea stressed that China's stimulus package and its subsidization policy for its steelmakers would have a major impact on the international steel trade, it said. South Korea also asked China to take measures to address concerns that Beijing's recent move to gincrease tax rebates to steel exporters would increase Chinese steel exports at the expense of other steelmakers around the world, undermining the global industry. South Korean delegates at the meeting included senior officials from the country's top two steelmakers POSCO and Hyundai Steel, the country's steel association and the energy ministry. POSCO's first-quarter net profit tumbled 68.5% on-year largely due to lower product prices. To cope with the sluggish demand, the world's fourth-biggest steelmaker reduced production from December and is extending output reduction through June. Hyundai Steel's first quarter net profit also plunged 62.4% year-on-year, marking the biggest quarterly profit drop in three years. The steel association did not disclose what the Chinese said at the meeting. They include officials from China's largest steel maker BaosteelGroup, China's steel industry association and the ministry of commerce. The Korea Iron and Steel Association also said South Korea's exports of steel products to Chinafrom January and May jumped 25.8% on-year to 2.15 million tons, or worth $1.78 billion, on the back of the Chinese stimulus package.