South Korea K-Steel Act Boosts Steel Producers Amid Energy Concerns

K-Steel Act Strengthens South Korea’s Steel Industry

South Korea’s National Assembly passed the K-Steel Act to support domestic steel producers and enhance competitiveness. The law mandates the Ministry of Trade, Industry, and Energy to develop five-year master plans and annual action plans. A special committee under the Prime Minister will oversee strategic decision-making and implementation, ensuring industry alignment with carbon neutrality goals.

The act introduces practical measures, including selecting low-carbon steel technologies, promoting green steel zones, and supporting production facilities. Scrap supply chains will also receive reinforcement, while critical infrastructure—electricity, water, and hydrogen—is incorporated into national baseline planning. The Korea Iron and Steel Association welcomed the legislation, anticipating faster implementation alongside the steel development plan announced in November 2025.

K-Steel Act Faces Energy and Cost Challenges

Despite the act’s support, the steel industry expressed disappointment over the exclusion of electricity subsidies. Transitioning to electric arc furnaces remains costly, while emissions reduction to meet NDC targets imposes further financial burdens. Steelmakers estimate combined expenses for higher electricity tariffs and emission permits could reach up to 1 trillion won annually. Three government ministries opposed electricity subsidies and tax breaks, citing potential World Trade Organization complaints and fairness concerns across sectors.

Meanwhile, the South Korean government introduced a supplementary support package. This includes a 400 billion won ($278 million) export guarantee program and 150 billion won for firms processing steel, aluminum, and copper. These measures aim to stimulate innovation, promote high value-added steel production, and ensure the sector’s resilience.

SuperMetalPrice Commentary:

The K-Steel Act provides a critical legal foundation for South Korea’s steel sector amid decarbonization pressures. However, energy cost challenges could slow the adoption of electric arc furnaces, affecting carbon reduction targets. Investors and industry stakeholders should monitor government support packages closely, as financial incentives and infrastructure improvements will determine the competitiveness of Korean steel in global markets.