Hyundai Steel “reduces sales of heavy plates for shipbuilding”… Establishment of steel pipe business subsidiary (comprehensive)

2023-10-25 07:22:51

Hyundai Steel Pohang Plant © News1 Reporter Choi Chang-ho

Hyundai Steel (004020) has decided to attempt to diversify its supply sources, including domestic semiconductor factories and offshore wind power projects, to increase profitability of heavy plates. In order to strengthen the competitiveness of the steel pipe business, we established a subsidiary, Hyundai Steel Pipe, and began independent management.

In its third quarter earnings announcement and conference call on the 25th, Hyundai Steel said, “Shipbuilding companies are increasing the use of low-cost overseas heavy plates to secure profitability,” and added, “We plan to lower the existing sales ratio for shipbuilding from 55% to 45%.”

Hyundai Steel’s heavy plates are relatively disadvantageous in terms of price compared to Chinese products. The strategy is to increase the profitability of the heavy plate business by lowering the shipbuilding ratio in the future.

A Hyundai Steel official explained, “We will expand demand for heavy plates through high-value-added businesses such as semiconductor factories and offshore wind power,” and added, “We are working hard to develop demand sources.”

In the case of the steel pipe business, it was decided to establish a subsidiary, Hyundai Steel Pipe, and maintain an independent management system. In the future, we plan to grow into a global steel pipe specialist by expanding domestic and overseas production capacity and strengthening investment in future businesses.

A Hyundai Steel official explained, “We decided that an independent subsidiary would be advantageous in order to implement strategies to secure future competitiveness early,” and “We are not considering an IPO (initial public offering).”

The recovery of the long product market, which is suffering due to the downturn in the downstream construction industry, is expected to take place next year. This year’s construction market is showing a downward trend in most figures, including orders, sales, and permits.

A Hyundai Steel official said, “The slowdown in the construction market is limiting the recovery of the long product market,” and added, “Next year, demand for long products will increase due to the supply of the third new city.”

On this day, Hyundai Steel announced that its consolidated operating profit for the third quarter was provisionally estimated at 228.4 billion won, a 38.8% decrease from the same period last year. During the same period, sales decreased by 10.2% to KRW 6.2832 trillion.

Going forward, we plan to secure profitability by discovering new demand and developing products. Representatively, we will build a third-generation steel plate production facility that improves formability while maintaining the strength of existing ultra-high-strength steel. It will begin commercial production by the second quarter of 2025 to respond to the transition to vehicle electrification.

A Hyundai Steel official said, “We will strengthen product sales in line with changes in the demand industry environment,” and “We will improve profitability by optimizing production and inventory.”

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