The Financial Committee expands funding support for the steel industry... releases a financial support plan of 78.6 trillion won

The Financial Committee report states that due to the worsening Middle East situation and the impact of US and European tariff policies, the financial burden on the steel industry is increasing. Therefore, a comprehensive financial support plan involving loans, bonds, and investments has been initiated.

Chairman Li Yiyuan diagnosed at the third Middle East situation-affected industry finance and production forum held on April 17, 2026, at the government Seoul office building that the steel industry is simultaneously facing concerns over rising logistics costs, supply chain instability, and supply-demand imbalance. He particularly believes that this shock may not be limited to the steel industry but could spread to downstream industries such as machinery and electronics. Steel is a fundamental material for various manufacturing sectors including automobiles, shipbuilding, machinery, and home appliances, which means that financial strain in one industry could have a ripple effect on the production and investment of other industries.

Firstly, financial authorities plan to expand loan support by utilizing both policy finance and private finance. Reflecting the additional revised budget, the scale of financial support projects by policy financial institutions has been increased to 25.6 trillion won, and the private financial sector also plans to operate autonomous support schemes exceeding 53 trillion won. The Financial Committee stated that it will review the performance of support across industries and the speed of fund depletion, and if necessary, will further expand the scope and scale of support. This is interpreted as a countermeasure aimed at initially opening funding channels for companies temporarily hindered by liquidity issues due to the shock, preventing production problems.

Measures also include improving bond issuance conditions. The Financial Committee decided that starting in April, for small and medium-sized enterprises and key companies affected by the Middle East situation, it will lower repayment ratios and subordinate underwriting ratios when they pledge bonds backed by the Credit Guarantee Fund for refinancing, to ease issuance burdens. The applicable bonds are those with a maturity of up to one year, with an estimated scale related to the steel industry of about 370 billion won. Subsequently, from June, plans are to encourage the Credit Guarantee Fund to directly issue bond-backed securities to reduce commissions paid to banks or securities firms. The authorities expect this move will reduce companies’ issuance costs by about 50 basis points, or 0.5 percentage points. Additionally, a bond market stabilization fund and purchase plans for corporate bonds and commercial paper will be launched simultaneously to support a broad range of bonds from higher credit ratings to lower ones.

Support for investment methods will also run in parallel. The Financial Committee announced that it will invest in six major core industries, including steel, through the corporate restructuring fund No. 6, with a total scale of 1 trillion won, established within April. The target industries include not only steel but also petrochemicals, semiconductors, automobiles, displays, and secondary batteries. The nature of this fund is not only to provide emergency operational support but also to focus on assisting companies with business restructuring and financial restructuring. This is because the longer external shocks last, the more companies need not only short-term liquidity but also medium- to long-term funds for adjusting production systems and restoring competitiveness. Chairman Li emphasized that the external shock caused by the Middle East war may not be confined to certain industries but could spread to the entire real economy, requiring close cooperation among the government, financial sector, and industry. This trend indicates that future support, depending on the Middle East situation and trade policies of major countries, could extend beyond the steel industry to other manufacturing sectors.