South Korea’s steel industry is speeding up restructuring amid growing concerns over chronic oversupply in the sector, according to local news reports Wednesday.

The reports said the Korea Iron & Steel Association -- whose members include all the major steel firms -- recently hired Boston Consulting Group to make a report on the steel industry’s restructuring measures. The report will reportedly include how to address chronic oversupply of the nation’s three largest steelmakers -- POSCO, Hyundai-Steel and Dong Kuk Steel Mill -- and their detailed restructuring plans. 


The steel association’s spokesperson confirmed the news reports but appeared cautious about making any other comment.

“We are making a report in a bid to strengthen the competitiveness of the struggling steel industry,” Hur Dae-young, chief of public relations of the association told The Korea Herald, without further elaborating.

Once the report is completed, it will be used as an indicator for whether the troubled steel companies can be backed by the government under the Corporate Vitality Enhancement Act slated to take effect in August.

The legislation is aimed at revitalizing struggling industries by providing regulatory relief and tax breaks if their restructuring plans win approval from an evaluation committee.

“When the restructuring plans gain approval from the committee in August, we will introduce diverse measures such as tax breaks to support the ailing industry,” said Kim Jong-chul, the Ministry of Trade, Industry and Energy’s steel and chemistry division.

Earlier in March, Industry Minister Joo Hyung-hwan picked the steel sector as the worst-hit by the economic downturn, saying, “The steel industry needs restructuring plans the most among others. We have already finished talks with the relevant companies.”

By Shin Ji-hye (shinjh@heraldcorp.com)