POSCO, Hyundai Steel Expand Overseas Networks Targeting Emerging Markets

3 July 2015

Korea’s top two steel companies, POSCO and Hyundai Steel, are accelerating the overseas market invasion. In order to do so, the two companies are rearranging the networks, including the expansion of overseas subsidiaries. In particular, they are targeting emerging countries in Southeast Asia and Latin America.

According to industry sources on July 2, Hyundai Steel, which has started operation as an integrated company with Hyundai Hysco on July 1, is now pushing ahead with an “Emerging Countries Target Project” by using the global networks of Hyundai Hysco.

The biggest achievement of Hyundai Steel latest merger with Hyundai Hysco is Hysco’s overseas steel service centers (SSCs) after the company has produced even cold-rolled steel products with the merger in the cold-rolled steel sector with Hyundai Hysco in 2013. Synergy effects from the latest merger will be different depending on how Hyundai Steel will make use of the SSCs, which are the overseas sales outlet of automotive steel. The centers are the core business of Hysco last year to such an extent that it accounted for 67.4 percent of the total sales last year. Currently, there are 11 SSCs in nine countries including the U.S., China, and India. Hyundai Steel is planning to expand the centers to 13 by next year.

Hyundai Steel is especially targeting the Mexican and Indian markets among global markets. Mexico has emerged as a strategic base for global automakers due to its low oil prices and interest rates. The company will open an SSC in the region in the first half of next year to aim at all Latin American markets, and utilize it as its hub in North America. India is also another major strategic region of the company, as the steel demand in the country is expected to rapidly rise due to its government’s aggressive economic stimulus package.

With POSCO upgrading its subsidiaries in strategic countries to its representative subsidiaries, the company is scrambling to restructure overseas sales networks. POSCO has provided customer relationship services based on its processing subsidiaries where global automakers are headquartered. Until now, the company has established 29 processing firms in 14 countries, including China and Japan.

Since March, its overseas subsidiaries in 11 countries, such as China, Japan, Australia, Myanmar, and Russia has sequentially become its representative subsidiaries. POSCO has also established production subsidiaries in Indonesia and Vietnam. These firms will play a role as an information hub for POSCO group in the future.

The group is also positively expanding its overseas technical service centers (TSCs). The TSCs are a global infrastructure network that provides services that customers want when they need. Each is a kind of small solution center and provide technical support, quality certifications, and other servicess. Currently, the group is running 23 TSCs in China, India, Southeast Asia, and the Americas.

POSCO will open an additional five centers in other countries by this year, increasing the number to 31 by next year. The move came after the steel demand in the global market is expected to be greater than the domestic market in the future. In fact, the overseas steel sales of the group in the first quarter of this year surpassed the domestic sales for the first time.

Meanwhile, POSCO’s cumulative steel production exceeded 800 million tons last month, 43 years after it established its first thick plate factory in Pohang and started business in July 1972. Eight tons of steel products are enough to build 800 million units of mid-sized cars and 20,000 units of 300,000 DWT very large crude carriers.