South Korea's Steel Production Increases Impact on East Asian Market

In April 2010, the No. 1 blast furnace of South Korea’s Hyundai Steel Company was put into operation, which means that Hyundai’s dream of entering the field of steel long-process smelting has finally come true. The new steel plant is located in Karatsu, 120km southwest of Seoul, South Korea. The volume of No. 1 blast furnace is 5250m3, and the design capacity is 4 million tons. Downstream production capacity includes two hot-rolled broadband production lines, a traditional slab caster and CSP thin slab casting and rolling mill, and a bar production line. In November 2010, the No. 2 blast furnace of the Hyundai Steel Company was completed and the crude steel production capacity of the Tangjin Steel Plant reached 8 million tons.

In 2004, Hyundai Steel Corporation acquired Han Baogang, the bankruptcy company in Incheon, and became the world's second largest electric furnace steel plant. The company also owns an electric furnace steel plant in Pohang. Since 2006, Hyundai Steel has invested heavily in the construction of large blast furnaces to produce high-quality plates for the manufacture of automobiles, ships and home appliances. Hyundai Steel is a subsidiary of Hyundai Kia Motors. The group has more than 60 large-scale companies, including Hyundai Motor and Kia Motors assembly plants all over the world, and it also has the world's largest shipyard.

Hyundai Steel Company maintains close cooperation with the subsidiaries of Hyundai Kia Motors Group. The company plans to increase the supply of coil products to the Hyundai-Kia Automotive Group. Hysco, another rolling mill in the group, specializes in cold rolled coils. In April 2011, Hyundai Steel also set up a new No. 3 blast furnace in the Tangjin area. By 2013, Hyundai Steel's crude steel production capacity will reach 24 million tons, of which 12 million tons will be electric furnace steel production capacity. In 2012, Hyundai Group plans to invest US$12 billion at home and abroad, an increase of 16% year-on-year, setting a new high for the Group's annual investment.

The Bank of Korea predicts that South Korea’s GDP will increase by 3.7% in 2012. Rapid growth in Korean steel production capacity has begun to affect the Japanese steel industry. In 2011, Japan’s exports of steel to South Korea decreased, but imports of steel from South Korea increased. At the same time, the devaluation of the won also promoted the growth of South Korea’s export trade. The Japanese steel industry is paying close attention to changes in South Korean steel production in the medium to long term. However, major Asian economies, especially China, will see further growth in crude steel production in 2012 and beyond.

Through investment in the Asian steel industry, Japan's blast furnace steel mills will continue to supply high-quality steel to domestic steel companies and affiliates in Asia and other regions, and even some affiliates in Korea. The establishment of an industrial chain on a global scale, especially in East Asia and Southeast Asia, will ensure that large steel companies in Japan and South Korea have a relatively good market environment. However, the fact is that steel production capacity in Asian countries and regions continues to grow and will pose great challenges to the steel industry in Japan and South Korea.