DELAYS IN STEEL PRODUCTION DUE TO TYPHOON

[Anchor Lead]

Typhoon Hinnamnor has forced POSCO to suspend its operations for the first time in 49 years. The steelmaker has sustained unprecedented damage from the typhoon and restoration will likely take more than half a year. If steel production is halted for a long time, the repercussions could spread to other industries as well.

[Pkg]

This is what POSCO looked like on September 6th after it was hit by Typhoon Hinnamnor. It's hard to tell if it's a steel mill or a river.

[Soundbite] "Fire trucks can’t move forward due to the water current. It's too strong."

The typhoon has forced POSCO to halt its operations for the first time in 49 years. The steelmaker was able to restart its furnaces a week later. The manufacturing of steel semi-finished products has also been resumed. However, the government believes it will take more time to normalize POSCO operations completely.

[Soundbite] Jang Young-jin(Vice minister of Trade, Industry and Energy(Sept. 14)) : "The second hot-coil factory will likely take at least six months to restore."

The rolling line located by a stream that overflowed during the typhoon was hit the hardest. This is where steel semi-finished products are processed according to their use. It was inundated for nine days after the flash flood. POSCO says restoration is going to take three months. Companies relying on steel products could sustain damage one after another. POSCO is the only domestic producer of wire rods and stainless steel used in auto components as well as electrical sheets used in electric vehicle motors. The relevant sectors are worried they could sustain losses due to manufacturing disruptions. If steel production is suspended for a long time, other sectors including ship building and automotive sectors could also bear the brunt.

[Soundbite] (Automotive industry staff(VOICE MODIFIED)) : "We have inventories worth 1-3 months and we are focused on production. If the situation continues, we’ll have to consider other options."

POSCO produces about one-fourth of steel in Korea. The government is considering importing some products from the steelmaker's overseas corporations. POSCO is to announce the estimated amount of damage and manufacturing resumption plans this week.