[한국은 지금] “Pohang Steel Mill’s 1st wire factory closed… “After 45 years of oversupply”

‘Korea Now’ introduces major news in Korea. Reporter Choi Won-ki has arrived.

Host) Welcome.

Reporter) Hello.

Host) What news is there today?

Reporter) We would like to inform you that the 1st wire rod plant at Pohang Steel Works in Korea has been closed. There is also news that prices and exchange rates are rising rapidly in North Korea.

Host) First, let’s look at the news about Pohang Steel, Korea’s representative steel mill.

Reporter) Yes, Pohang Steel Mill’s first wire rod plant has been closed. Pohang Steel announced on the 19th that Wire Rod Plant No. 1 was closed after 45 years and 9 months of operation. This closure of the No. 1 wire rod plant is the second closure following the Pohang No. 1 steel mill in July.

Host) But please explain what a ‘wire factory’ is.

Reporter) Seonjae is a translation of ‘wire rod’ in English. It refers to a product obtained by rolling semi-finished steel products into thin lines. So, steel wires, wire ropes, welding rods, nails, screws, etc. were made using the wire rods made this way, but this time it was shut down.

Host) Why was the wire rod factory closed?

Reporter) In short, it was because we could not withstand the low-price offensive of Chinese products. Pohang Steel has had a lot of fun making wire rod products, but now things have changed. There is currently an oversupply in the global steel market due to Chinese steel. Last year, global demand for wire rod was 90 million tons, but supply reached 200 million tons. Among these, China’s wire rod production capacity amounts to 140 million tons. Therefore, Pohang Steel had no choice but to close the wire rod factory.

Host) If the wire rod factory disappears, how will products such as nails and screws be made?

Reporter) Pohang Steel has four wire rod factories, but the one that was closed this time is the oldest and oldest factory. The necessary wire rods will be produced at other factories, and employees working at the first wire rod factory will be reassigned. In addition, Pohang Steel plans to reduce the proportion of inexpensive products such as wire rods and instead focus on producing high value-added products such as special bolts for automobiles, spring steel, and bearing steel.

Host) Let’s move on to the next news. I heard that prices and exchange rates are rising steeply in North Korea.

Reporter) Yes, prices and exchange rates are skyrocketing in North Korea’s markets. According to Asia Press, a Japanese media outlet specializing in North Korea, as of November 15, the price of rice is 8,200 won per kg, the price of corn is 3,700 won, and the exchange rate is 18,500 won per dollar.

Host) Let’s go through them one by one. The price of rice was around 5,000 won in January of this year. Why did it rise so much?

Reporter) It appears that the amount of rice supplied to the market has decreased. According to China’s General Administration of Customs, from January to June this year, North Korea imported $5.71 million worth of rice from China. This is one-tenth of the $50 million imported in the same period last year. Rice imports have decreased significantly.

Host) If the price of rice rises like this, a person earning 3,000 won per month will not be able to buy even 1 kg of rice even if he or she receives his salary.

Reporter) According to Daily NK, a South Korean media outlet specializing in North Korea, North Korean residents are experiencing significant difficulties these days due to rising food prices. According to sources in North Hamgyong Province, as the prices of rice and corn, which are staple foods, are rising, more and more residents are reducing their consumption of rice or replacing their meals with ‘corn porridge’ made by boiling cornmeal with vegetables.

Host) Also, the exchange rate was around 8,000 won per dollar, but it has almost doubled.

Reporter) Yes, North Korea’s won/dollar exchange rate was 8,300 won in January, but more than doubled to 18,500 won in November. It is unprecedented for the North Korean exchange rate to rise like this.

Host) How should we view the reason why the exchange rate has risen so much?

Reporter) Experts say there are three factors. First of all, the Kim Jong-un regime is known to have raised workers’ wages at the end of last year. However, as a lot of money was released into the market through wage increases, inflation and rising prices occurred, which led to an increase in the exchange rate.

Host) What is another factor?

Reporter) The second factor is that trade with China has resumed as the new coronavirus situation is resolved. To trade with China, you need dollars. Therefore, as the number of people willing to buy dollars in the market increases, the natural exchange rate rises.

Host) Are there any other factors?

Reporter) The exchange rate may have risen due to the ‘20×10 local development policy’ promoted by Chairman Kim Jong-un. Currently, the North Korean leadership is building factories in various local areas. The central party in Pyongyang is building the factory building using the military, but the local party must provide the factory equipment and raw materials on its own. Therefore, local parties have no choice but to import equipment and raw materials from China, and this process requires dollarization, which may have encouraged the rise in exchange rates.

Host) If prices rise without income increasing, do you think residents will experience difficulties?

Reporter) You should look at it that way. Experts say that if residents’ income does not rise and inflation and rising prices continue, residents will inevitably become poorer.

Host) Korea is now reporter Choi Won-ki.

**How might the‍ economic crisis in North Korea, characterized by soaring prices and a volatile exchange rate, exacerbate existing social and political tensions within the country?**

## ⁣World Today News Interview: Economy in ⁣Korea

** Host:** Welcome to World Today News. Today, we’re joined by two experts to ‍discuss recent economic developments ‍in both South and North Korea. Joining us: [Guest 1 Name],⁢ a specialist in South Korean industrial economics, and [Guest 2 Name], an expert on North ‍Korean economics and society.

**Section 1: Solar Eclipse on Steel: ⁢The Closure of Pohang’s⁣ Wire Rod Factory**

** ​Host:** [Guest 1 Name], let’s ⁢start with the news of ⁢the closure ⁤of Pohang Steel Works’ first wire rod plant. This is a significant event ⁣for South Korea’s steel industry. ‌Can you provide some ‍context on the reasons behind this closure? What ⁤does this tell us about the current state of the global⁣ steel market?

** [Guest 1 Name]:**

*

**Host:** This⁢ closure highlights the intense ‌competition from Chinese steel production. [Guest 1 Name], how do you think the⁢ South Korean steel industry can adapt to this new reality? Can innovation and diversification be the key to survival?

**[Guest 1 Name]:** ⁣

**Section 2: Economic Turmoil in the North: ‍Soaring Prices and a Volatile⁤ Exchange Rate**

**Host:** [Guest 2 Name], turning our attention to North Korea, the article mentions ​a ​dramatic rise in both food prices and the ‌exchange rate.

What are the potential underlying ⁢causes of this economic turmoil in North Korea?

​**[Guest 2 Name]:**

*

**Host:** Can you‍ elaborate on the impact ⁢of ⁤these rising prices‌ on the everyday lives⁣ of ordinary North Koreans?

**[Guest 2 Name]:**

*

**Section 3: Looking Ahead: Diverging Paths**

** Host:** This divide‌ between‌ North and South ‌Korea in terms of economic development is​ stark.

[Guest 1 Name], what future do you see​ for the ​South ⁤Korean steel industry in light of ⁤these ⁤global challenges? Do you think the South ⁤Korean ‍government is ‍doing enough to support‌ the industry?

**[Guest 1 Name]:**

*

**Host:** [Guest 2 Name], what ⁢are the potential long-term consequences of ⁢the current economic situation in‍ North Korea? What⁣ changes, if ⁢any, are likely to occur in the near future?

** [Guest 2 Name]:**

**Closing**

**Host:**

Many thanks to [Guest 1 Name] and [Guest 2 Name] for sharing their insights‍ into these ⁤fascinating and complex developments.

For our viewers, ⁣we encourage you to continue following this crucial story ⁢and stay informed about the changing economic landscape in the Korean peninsula.

This has been World Today News.