Higher U.S. steel prices offset a 50% tariff, sustaining profits
Headquarters of Hyundai Steel. (Photo courtesy of Hyundai Steel)
Hyundai Steel is moving to shore up its performance by significantly expanding its rebar exports primarily to the U.S. market. Analysis suggests that despite high tariffs, a surge in local prices has offset the costs, creating a structure where profitability is secured.
During its first-quarter conference call on April 24, Hyundai Steel announced that its rebar exports to the U.S. increased by 286% compared to the previous quarter. This is attributed to the solid market for long products in the U.S. Kim Sung-min, Head of the Sales Division at Hyundai Steel, explained, “With the rapid rise in steel prices within the U.S., exporting has become viable even considering the 50% tariff. We are gradually expanding our export volume in consideration of market conditions.”
The backdrop is the strong steel prices in the U.S., driven by a combination of expanded infrastructure investment and supply shortages. Hyundai Steel is also adopting a strategy of flexibly adjusting volumes by comparing profitability between domestic sales and exports.
Variables in the Middle East are also positively impacting the market. It has been reported that damage to Iranian steelmakers has reduced the supply of semi-finished products, putting upward pressure on global prices. Hyundai Steel anticipates that reconstruction demand will materialize in earnest about six months after the end of the war and is considering a joint response with domestic construction companies.
However, the export share to the Middle East itself is limited,at less than 1%. Instead, the burden of logistics costs due to rising oil prices is acting as a more significant variable. A Hyundai Steel official stated, “We are focusing on cost reduction by shifting long-distance logistics to short-distance routes.”
Signs that the domestic steel market is bottoming out are being detected. Prices for hot-rolled coil and rebar have entered a normalization phase due to a decrease in low-priced imports and the reflection of rising raw material costs. Although the spread worsened in the first quarter due to rising raw material prices, the company explained that profitability is expected to improve from the second quarter as the effects of price hikes are reflected.
Amid a sluggish construction market, large-scale projects are propping up demand. Investments in semiconductors by companies like Samsung Electronics and SK hynix, along with public infrastructure projects, are supporting the downside. A gradual recovery is anticipated in the second half of the year, centered on an expansion of public sector orders.
Hyundai Steel is expanding its business areas beyond the traditional construction-focused demand structure to data centers and energy infrastructure. It is pursuing the supply of steel for data centers in a package format that combines standard models with custom designs, and has completed its initial supply of steel for ESS (Energy Storage System) enclosures to the North American market.
The company is also strengthening its response in the power grid and renewable energy sectors. It is establishing a supply system for steel used in transmission towers and is pursuing the development of new models with Korea Electric Power Corporation. It is also collaborating with Hyundai E&C on the joint development of floating offshore wind power projects.
The green transition is also a key strategy. Hyundai Steel has become the world’s first to mass-produce low-carbon steel plates using a hybrid method combining Electric Arc Furnaces and Blast Furnaces, supplying them to automakers. Furthermore, through innovations in its heat treatment process, the company has secured technology that reduces process time by 80% and cuts carbon emissions by 40%.
Expanded investment at the group level is also expected to serve as a demand base. In Hyundai Motor Group’s Saemangeum project, it is highly likely that Hyundai Steel will be responsible for supplying high-performance steel required for various businesses, including data centers, robotics, and solar power. In particular, demand for products with enhanced corrosion and seismic resistance is expected to increase.
Regarding the government-led restructuring of the rebar-centric industry structure, Lim Hee-joong, Head of the Strategic Planning Division at Hyundai Steel, stated, “The government and the industry share a consensus on the need for business restructuring to resolve oversupply and strengthen industrial competitiveness,” adding that the company will respond in line with future policy directions.
Jung Min-hee
댓글
0