South Korean steel giants may soon forge a rare alliance overseas, as industry leader Posco weighs a stake in Hyundai Steel’s planned US plant in a calculated effort to break through trade barriers under the second Donald Trump administration.
According to industry sources on Monday, Posco is in talks to join Hyundai Steel’s $5.8 billion electric arc furnace project in Louisiana, where Hyundai plans to fund half the cost through equity participation from affiliates and outside investors.
Posco has emerged as a strong contender, sources said, with discussions reportedly centered on a financial stake that could perhaps include rights to a portion of the US plant’s steel output.
In March, Hyundai Steel pledged a $5.8 billion investment to build its first US plant in Louisiana, as part of efforts to establish a localized supply chain for Hyundai Motor. The facility is slated to begin commercial production of steel sheets by 2029, with an annual capacity of 2.7 million metric tons.
Posco's move comes as the US slaps a flat 25 percent tariff on imported steel — a separate trade barrier from the quota system introduced under the first Trump administration, which capped Korean steel exports at 2.63 million tons annually.
The rare coalition between the nation's two leading steelmakers is expected to bolster their overseas competitiveness, as investing in local production would not only shield them from protectionist policies, but also allow for a faster, more agile response to global supply chain volatility.
Industry insiders predict that both sides would benefit, as Hyundai Steel would be able to partially fund the plant’s construction through a domestic partner well-versed in the steel industry, while Posco would gain a valuable foothold in the US market.
According to Posco, the company is reviewing a range of strategic options for entering the US market. “A concrete plan or decision has yet to be made,” a company official said.
Posco has been actively working to expand its presence in key growth markets, including the US and India, with the company exporting approximately 500,000 tons of hot-rolled steel to the US last year. The US accounted for 13 percent of Korea’s steel exports last year.
As part of the company’s global push, Group Chair Chang In-hwa, in particular, has emphasized fully localized, end-to-end production strategies.
Earlier this month, he participated in the World Steel Association’s executive committee meeting in Australia, where he engaged in discussions on business partnerships and technology collaboration with global peers, including India’s JSW Steel and China’s HBIS Group.
minmin@heraldcorp.com
