A prolonged downturn in South Korea's steel industry is pushing small and medium-sized manufacturers into court-supervised rehabilitation, raising the prospect of more asset sales and M&A if self-rescue efforts fail. Busan Steel and Boseong Steel are undergoing rehabilitation to normalize management, while Jinyeong S-Tech began proceedings last month and is pursuing recovery measures including the appointment of a chief restructuring officer. Rehabilitation does not automatically lead to an acquisition: Kossteel completed its process on May 8 after restructuring that included factory liquidation, while steel pipe manufacturer Daewon S&F failed to restore operations independently and received a court decision terminating rehabilitation in November last year. Mid-sized Jeong-an Steel is seeking a buyer during rehabilitation, with a reported transaction range of 70 billion to 80 billion Korean won, slightly above its 69 billion won liquidation value. Domestic steel demand fell to 43.59 million tons last year, a 23-year low, amid a prolonged construction slump and weaker manufacturing activity, including in automobiles. Demand rose 3.2% year-on-year from January through April, but the POSCO Management Research Institute expects annual demand to remain below 45 million tons in 2026 and 2027. Chinese oversupply and U.S. Section 232 tariffs of up to 50% on steel types 72 and industrial steel products 73 are adding to pressure. Industry participants say more companies attempting self-rescue could seek external investment or sell management rights if the downturn continues.