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POSCO, the world's seventh largest steel SA662 Grade B steel producer, is considering investing in its competitor Hyundai Steel's upcoming first overseas steel plant in the United States to achieve localized production and avoid tariffs of up to 25% on imported steel.
This will be the first cooperation between two major South Korean steel companies in overseas markets, and is also seen as an important turning point in the competitive relationship of the South Korean steel industry under increasingly severe trade protectionism pressure.
It is reported that Hyundai Motor SA662 Grade B steel Group, the parent company of Hyundai Steel, has announced an investment of 8.5 trillion Korean won (approximately 5.9 billion US dollars) to build a steel mill in Louisiana, USA, with plans to start production in 2029. According to Hyundai, it is expected that about 50% of the funding for the project will be raised through equity investments by Hyundai's subsidiaries and external shareholders, while the remaining funds will be resolved through debt financing. Currently, POSCO is in deep negotiations with Hyundai Motor Group regarding investment cooperation matters, which involve POSCO's investment ratio and production arrangements at the factory.
Industry insiders point out that if this cooperation is implemented, POSCO will be able to enter the US market on a "curve" and avoid high tariff barriers; Modern iron production can reduce project risks and financial pressures by leveraging POSCO's experience and capital in steel manufacturing. Analysts also believe that the cooperation is expected to expand to future technology areas such as joint research and development of low-carbon smelting, paving the way for both parties to transform into green steel.
However, cooperation still faces significant obstacles. It is reported that POSCO has proposed allowing the use of some production lines to produce its own branded products at the factory as a condition for investment exchange, while Hyundai Steel has reservations about this. Meanwhile, several international steel companies, including ArcelorMittal, have expressed their investment intentions, which has put POSCO under competitive pressure.
Nevertheless, the market is generally optimistic about the possibility of achieving this potential cooperation. The current global steel industry is facing dual challenges of China's low-priced resource impact and trade protection policies. The shift from competition to cooperation among South Korean SA662 Grade B steel companies is seen as a rational choice to cope with external uncertainty. If the cooperation is ultimately implemented, it is expected that after the project is put into operation, it will provide tax-free steel for the annual production of approximately 1.2 million vehicles by Hyundai Motor and Kia Motors under the Hyundai Group in the United States. POSCO is also expected to use this opportunity to layout the supply chains of American automakers such as General Motors and Ford, achieving a "zero basis entry" into American production capacity.
Observers in the steel industry point out that this move is not only an important step for South Korean steel companies to expand globally, but also reflects that in the context of global supply chain restructuring, top companies are achieving resource sharing, risk sharing, and cost optimization through flexible cooperation. The progress of this project in the future will become an important window for observing the internationalization strategy of the South Korean steel industry.
