**Seoul**: POSCO is negotiating an investment in Hyundai Steel’s first overseas plant in Louisiana, set to open in 2029. This collaboration aims to counteract US tariffs on steel imports. The partnership may also foster innovation in steelmaking technologies amidst changing market dynamics.
POSCO, the seventh-largest steelmaker in the world, is in active discussions to invest in Hyundai Steel Co.’s first overseas steel plant, located in Donaldsonville, Louisiana, set to commence operations in 2029. This initiative comes as both companies seek to adjust to rising US tariffs on imported steel, which are currently set at 25%.
According to reports from industry insiders, POSCO Holdings Inc., which is the parent company of POSCO, is negotiating with Hyundai Motor Group, Hyundai Steel’s parent company, regarding the details of this investment. The potential collaboration would represent the first joint investment and production venture outside Korea for the two leading steelmakers, who have long been rivals in the market.
Earlier this year, Hyundai Motor Group announced an investment of 8.5 trillion won (approximately $5.9 billion) to establish Hyundai Steel’s plant in Louisiana. The announced investment would be funded through equity from Hyundai Motor affiliates and other external investors, with the remainder financed via debt. Reports indicate that the two companies are working through specifics relating to the size and structure of POSCO’s investment.
Both companies have faced increasing pressure from US trade policies, resulting in a significant reconsideration of their competitive stances. POSCO and Hyundai Steel have been rivals since Hyundai entered the blast furnace market in 2004, traditionally dominated by POSCO. However, the increasing tariffs on imported steel and stricter regulations have prompted both companies to consider collaboration instead of continued competition, particularly in international markets.
Hyundai Steel’s decision to build the plant has surprised POSCO but may also create a beneficial opportunity to enter the US market. Through a partnership, POSCO could establish a local production base without incurring the complete costs associated with building a plant independently. Conversely, Hyundai Steel would be able to leverage POSCO’s extensive knowledge in steel production while reducing the financial strain of the investment.
Nonetheless, the partnership discussions have encountered challenges. Sources indicate that POSCO is requesting access to several production lines at Hyundai Steel’s facility to manufacture its products in exchange for its financial stake. Hyundai Steel, however, appears reluctant to agree to these terms. Furthermore, competitive dynamics are intensified by interest from other multinational steelmakers, including ArcelorMittal, who are also expressing intentions to invest in the plant.
Industry analysts believe that an alliance between the two steel giants could be advantageous, particularly in mitigating the impact of trade protectionism and countering competition from lower-priced Chinese steel imports. If an agreement is reached, the Louisiana plant is expected to supply tariff-free steel to Hyundai’s automotive manufacturing operations in the US, including those of Hyundai Motor Co. and Kia Corp., which anticipate producing 1.2 million vehicles yearly.
In addition to shared production, this partnership could pave the way for joint efforts in developing innovative and sustainable steelmaking technologies, as suggested by industry experts. The anticipated collaboration reflects a strategic shift in the steel sector amidst ongoing market pressures.
Source: Noah Wire Services
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