Capacity utilization rates of mills sharply fall, causing processingcommissions to drop competitively At present, most of steel service centers (SSCs) dealing in hot-rolled coils (HR) in the Gwangyang Ind. Complex are in a lot of difficulties in operating their mills for lack of materials and thus, how to secure HR materials has reportedly become the most important keyto their survival. All the SSCs but one firm or two are running their mills at the capacity utilization rate of less than 50% on average and not a few number of them have suspended the mill operation amid such supply shortages of materials forthe reason that they are conducting preventive facility maintenance. Aiming at the POSCO's min-mill operation, a lot of HR processors have been mushrooming in the Gwangyang Ind. Complex more densely than any in other areas, causing their survival competitions intensified for a lower unit commission in processing works. An official at a HR processor in the Gwangyang Ind. Complex said that the actual commission for processingworks has dropped to a range of 7,000-7,500 won per ton, even though they are quoting the commission at 8,000 won for thin HR coils with 1.4-6.5mm in thickness and 9,000 won for thick ones with 6.0-13.0mm. Another official said, ‘Consumers are moving toward lower commission, if there is any. Thus, those SSCs that do not have much tonnage for in-house processing due to short supply of HR materials are busy these days in studying competitors' countenance in their severe sales competition for processing works on a commission basis. In order to prevent possible cornering by some distributors, POSCO has implemented its HR supply policy this year with the top priority given to end-users, reducing their supply to distributors by 15% in the first quarter of this year and another 15% in the second quarter. Particularly, since POSCOis intentionally reducing its supply ofHR to those distributors who have frequently failed to pay bills or are giving an excessively great deal of weight on distribution, the supply shortages of HR is being sustained in the distribution market. While general supply shortage of materials is continuing like this, SSCs in the Gwangyang Ind. Complex are reportedly having mixed feeling in their outlook for the future business. jhkwak@snmnews.com