The investment to build hot dip galvanizing lines will continue to the year of 2006. The according drastic increase of production capacity will ease the severe shortage of galvanized steel sheets from next year and reduce the import. The producers planning new lines are seven including POSCO, Dongbu Steel, POCOS, SeAH Steel, Seil Steel, Haewon MSC, nd Hyundai HySco. The added capacity of the seven will be 2.38 million tons, comprising 660 thousand tons of this year, 970 thousand tons of 2005, and 750 thousand tons of 2006. Haewon MSC commissioned its 150 thousand ton line in April and started up production in June. Seil Steel's 210 thousand ton facility will be imported by October. POCOS' 300 thousand ton facility will be completed in November. Those three producers' added capacity reaches to 660 thousand tons, making total annual capacity 4,705 thousand tons. Next year's addition will be SeAH's 300 thousand tons, Dongbu's 270 thousand tons at its Asan Works, and POSCO's 400 thousand tons of Galvannealed sheet production line at its Kwangyang Works. In 2006, POSCO's No. 6 CGL with annual capacity of 400 thousand tons will be completed. In addition to it, Hanbo Steel's 350 thousand ton CGL might start production, in case Hyundai HySco successfully acquire Hanbo. With all the planned completion of new lines, the total annual production capacity of hot dip galvanizing steel sheets will sum to 6.4 million tons, adding 2.4 million tons in three years. ▶ New demand-supply structure The explosive increase of capacity will change the demand-supply structure in the domestic market. The biggest producer of galvanized sheets of Korea plans to change about 70% of its 2 million ton annual capacity to production of Galvannealed sheets for the auto application, so non-auto application quantity availability will be 600 thousand tons or so. In case of Hyundai HySco, the chances are that it will produce Galvannealed sheets only at its Yulchon Works and the acquired Hanbo's CGL facility will produce galvanized sheets for construction and prepainting usage, resulting in less quantity availability for external sale. So, the added capacity of POSCO and Hyundai HySco is differentiated from the others, giving no contribution to the construction-related quantity. But, the case of Seil, POCOS, and SeAH is different. They have bought sizable or entire tonnage of substrate from outside suppliers and will not need to depend on those suppliers. Probably, the added tonnage will be of great help in achieving self-sufficiency in years. The quantity for construction market will be from Dongbu and Haewon MSC. Dongbu will use partial tonnage for its prepainting line, but major quantity can be shipped to the construction market. Haewon's entire quantity is aimed for the construction market. Subsequently, 420 thousand tons out the planned expansion will be for distribution and construction market. Thus far, the domestic galvanized sheet supply has been behind the demand, and the import has increased continuously since 1999, reaching to half million tons last year. This year's import estimation is 940 thousand tons based on current pace of import, though POSRI forecast is 700 thousand. But, the added capacity will replace pretty much portion of import for construction market and prepainting substrates, changing the demand-supply structure. sunhong@snmnews.com