Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

South Korean steelmakers are likely to stick to their overseas investment plans despite the global COVID-19 outbreak. These plans by major steelmakers are in tune with their targets to regulate global supply chains for future growth. South Korean steel mills registered a lesser decline in production and overall profits than their counterparts in other Asian countries. 

The steelmakers are also mulling sales of their loss-making domestic units to keep their balance sheets healthy. This, since domestic demand has taken a hit amid the pandemic as auto and appliance manufacturers are forced to shut down in South Korea.


Posco to keep its investment in SE Asia 

A major steelmaker Posco will go ahead with its investment of total KRW21.2bn ($17.5mn) in SS Vina, wholly-owned Vietnamese subsidiary over the next three years. Of the total, the company will invest KRW11.1bn in 2020. The investment is aimed at improving operational productivity and scale down overall costs.


SS Vina steel mill was unable to make profits since its establishment in 2015 and was acquired by the joint venture formed between Posco steel and Yamato Group. Japanese section-steel maker, Yamato Group owns 49pc stake. SS Vina continues to bear heavy losses. 


In Indonesia, Posco is expected to commence operations at the new third P-IJPC factory as scheduled in 2020. The automotive steel plate facility at Karawang International Industrial City in Jakarta would have an annual capacity of 100,000mt, that would take Posco’s total annual production capacity in Indonesia to 300,000mt. The company may go ahead with its investment in PT. Krakatau Posco, a joint venture with Indonesia’s state-run Krakatau Steel whose total output was 3.02mn mt in 2019. 


Hyundai Steel’s to raise investments in the Czech Republic

Hyundai Steel had invested KRW7.7bn in 2019 to build a hot stamping plant in Ostrava in the Czech Republic. The company is likely to infuse more funds in the venture in 2020 from its total budget of KRW59.1bn. Hyundai steel aims to cater to a potential demand in Europe and expand in the global automotive steel sheet industry. With two hot stamping facilities and one blanking facility, its total annual capacity would reach 3.35mn mt. 


Indian ventures on hold 

The Indian government was keen to bring Japanese steel mills in India with factories in Andhra Pradesh and Odisha. After the COVID-19 outbreak, these plans have been kept on hold. Mainly since the domestic steel demand could show a sluggish recovery in the future. As part of their de-risking strategy, the Japanese government is anticipated to spend nearly $2bn to relocate companies out of China. 

Leave a Reply

Your email address will not be published.