Steelmakers want more as 'K-steel Act' takes effect

A new law designed to help domestic steelmakers respond to mounting pressure from Chinese competition and global carbon regulations took effect on Tuesday.

Industry officials welcomed the move but said the law stops short of offering the financial support needed for a costly shift to greener production.

 The new law, dubbed the K-steel Act, intends to help domestic steelmakers amid the glut of low-cost Chinese steel exports and increasingly stringent global carbon regulations, ultimately accelerating the industry’s transition to low-carbon production by supporting the development of green steel technologies and expanding demand for low-carbon steel products.

A dedicated committee will be established under the Prime Minister’s Office to oversee steel-sector decarbonization efforts. The legislation also introduces a certification system for low-carbon steel and measures to encourage its use in the public sector.

The law also provides a legal basis for exemptions from certain fair-trade regulations when restructuring is deemed necessary in oversupplied segments of the industry, paving the way for capacity reductions and broader structural reforms.

Steelmakers agree that transforming the industry is no longer optional, with major producers investing heavily in low-carbon technologies that can dramatically reduce emissions.

Posco completed a 600 billion won ($396 million) electric arc furnace (EAF) with an annual production capacity of 2.5 million tons in Gwangyang, South Jeolla, on Tuesday. The facility is the largest of its kind in Korea and can reduce carbon emissions by up to 75 percent compared with conventional blast furnaces.

Prime Minister Kim Min-seok, Posco Group CEO Chang In-hwa and other government and industry officials attended the completion ceremony.

"This [EAF] is more than just another piece of equipment," Chang said. "It reflects Gwangyang steelworks' determination to tackle the era-defining challenge of carbon neutrality and reshape the global steel industry."

Kim pledged the government will “support the steel sector's transition efforts” at the remarks.

Hyundai Steel has also accelerated its decarbonization efforts. In February, it became the first company in the world to establish a commercial-scale hybrid EAF-blast furnace production system and is now producing low-carbon steel sheets that reduce carbon emissions by roughly 20 percent.

Dongkuk Steel, the first steelmaker in Korea to adopt EAF, is likewise expanding its low-carbon steel production capabilities.

Despite the progress, the industry believes the new support measures have not kept pace with rising costs.

"The bill did not include some of the measures the industry had long requested, such as tax incentives," a steel industry source said. "The government should consider providing incentives for private companies that use low-carbon steel products."

The high cost of electricity remains another major concern.

Industrial electricity rates rose 75.8 percent to 185.5 won per kilowatt-hour in the fourth quarter of 2024 from 105.5 won in the first quarter of 2022, according to the Korea Enterprises Federation.

"Ultimately, [decarbonization] requires using more electricity, but the law does little to ease one of the industry's biggest cost burdens," another industry source said.

Industry sources have been more positive about provisions that allow exemptions from certain fair-trade regulations during corporate restructuring. The new measure reportedly provides a legal framework for capacity reductions and broader restructuring efforts in oversupplied segments of the steel industry.

"It is meaningful that a legal foundation is now in place to support the steel industry as a strategic national industry," an industry source said. "But the law's real impact will depend on what comes next — whether the government follows through with measures such as tax incentives, lower electricity costs and policies that create demand for low-carbon steel."

BY LEE SU-JEONG [[email protected]]