Steelmakers, chemicals producers pressed to scale down excessive capacity

South Korea's financial regulator said Sunday that local steelmakers and chemicals producers will be under pressure to reduce their excessive output capacity amid a protracted economic slump.

Under the measures, local banks will prod steelmakers and chemicals manufacturers to slim down their production capacity as part of efforts to reduce financial risks.

Local construction firms will be also pressed to conduct voluntary restructuring efforts, while the local shipping industry will also face mounting pressure to voluntarily seek restructuring, according to the Financial Services Commission.

The set of measures came as the country's corporate sector faces a double whammy of low profitability and a slump in revenues amid an economic slowdown.

The local shipbuilding sector, in particular, is suffering massive losses stemming from order cancellations and a delay in the construction of offshore facilities.

In the third quarter of the year, the country's big three shipyards -- Hyundai Heavy Industries Co., Samsung Heavy Industries Co. and Daewoo Shipbuilding & Marine Engineering Co. -- racked up a combined operating loss of 2.1 trillion won (US$1.85 billion) during the July-September period.

The combined operating loss by the country's big three shipyards is estimated at 7.8 trillion won for the year, marking the first time the top three shipyards have suffered operating losses on an annual basis. (Yonhap)