Business | General
Hyundai Steel to invest $2.4b in furnace
Hyundai Steel, South Korea's second-largest steelmaker, may spend 2.3 trillion won ($2.4 billion) to build a third blast furnace by 2015 as demand for steel used in cars and ships soars.
- Bloomberg
- Published: 00:32 March 10, 2008
Seoul: Hyundai Steel, South Korea's second-largest steelmaker, may spend 2.3 trillion won ($2.4 billion) to build a third blast furnace by 2015 as demand for steel used in cars and ships soars.
The plant, which burns iron ore and coal, may produce 4 million metric tonnes of steel a year, Kim Soo-min, executive vice-president of the Incheon, South Korea-based company, said over telephone.
Output from its first two blast furnaces under construction will start from 2010. Blast furnaces allow Hyundai Steel to make automotive steel and heavy plates used in ships and compete with rival Posco as demand increases. The move also paves the way for BHP Billiton Ltd and other mining companies to sell more iron ore and coal to Hyundai Steel.
Long-term business
"It is a business that's worth trying in the longer term," Kim Gyung-jung, an analyst with Samsung Securities Co., said in Seoul.
"Global steel demand will continue to grow led by Asia and the Middle East. In addition, the company's affiliate Hyundai Motor will need steel at a steady pace."
Prices of steel plates may gain as shortages will persist in Asia until 2010 because of demand from shipyards in China and South Korea, Mirae Asset Securities Co. said last month.
Posco, the country's largest steelmaker, plans to raise sales of automotive steel by 9 per cent this year to bolster profits.
"We'll have to see when is the best time to build a third blast furnace," Hyundai Steel's Kim said.
The first two blast furnaces will have a combined capacity of 8 million tonnes a year. Hyundai Steel currently produces 11 million tonnes of steel from its electric-arc furnaces, which use scrap metal as a raw material.
South Korean steelmakers' combined spending on capacity expansion may rise by 63 per cent to a record 7.06 trillion won this year, the Korea Iron & Steel Association said yesterday.
Agreements
The company plans to sign agreements this year to buy more iron ore to supply its first two blast furnaces, Hyundai Steel said in a statement.
It has secured 70 per cent of the 13 million tonnes a year of iron ore needed with Rio Tinto Group and Cia Vale do Rio Doce, the statement said.
It expects to complete a contract with BHP Billiton to buy as much as 5 million tonnes of iron ore by June, the Korean company said.
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