The impact of China’s cooling steel industry is starting to spread.South Korea’s Posco, the world’s fifth-biggest steel producer, plans to purge business units to try to counter the China-induced slump in global steel markets. The company reported a 61 percent drop in second-quarter profit.

Posco’s shake-up shows how the world’s steel producers are having to react to a contraction in China’s demand after decades of unprecedented expansion. The speed of the slowdown is roiling global markets for the material as unneeded supplies from the world’s biggest producer are exported across the world.

China’s steel exports surged 28 percent in the first half of 2015 and may top 105 million metric tons this year, according to Bloomberg Intelligence. To put that in perspective, ArcelorMittal, the world’s biggest producer and almost twice the size of its nearest rival, made 93.1 million tons of the material last year.

“China slowing down is not directly the issue; China’s export rate is the issue as they haven’t cut production,” said Tim Huff, an analyst at RBC Capital Markets in London. “Chinese exports are the barometer for the health of the global steel industry. As soon as it goes over 5 million tons a month you have an issue, and it becomes an incredibly large issue when they’re exporting 10 million tons per month.”

Posco said Wednesday that it will reduce the number of domestic-market business units by 50 percent and those overseas by 30 percent. The company will “aggressively” leave non-core operations, Chief Executive Officer Kwon Oh Joon said at a briefing in Seoul on Wednesday.

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