Hyundai Steel Plans Restitution of Output in the Last Half of 2009

Mr. Jong-In Lee, Executive Vice President of Hyundai Steel, explained recent steel market conditions and Hyundai Steel’s management strategy at a private interview with to Japan Metal Bulletin.

Mr. Lee said World Steel Dynamics reported global crude steel output is expected at 1.339 billion tonnes through 2008 and 1.149 billion tonnes through 2009, to decrease by 14.2% in 2009 from 2008 including China. South Korean crude steel output is expected to reduce by 1.6% to 53.1 million tonnes in 2009 from 2008 according to South Korea Iron and Steel Association. Mr. Lee said South Korean steel demand is expected to decrease by 9.5% to 72.3 million tonnes. The demand for bar and shaped steel is expected to down by 14-18%, but he explained, Hyundai Steel forecasts the demand for bar and shaped steel might shrink by 40-50% for January-March 2009 from the same period of 2008 and by over 20% in the last half of 2009 from the same period of last year.

Mr. Lee said Hyundai Steel is reducing the steel output by 30% compared with common operation. Mr. Lee expects to operate normally in the last half of 2009 when South Korean carries out financial investment in earnest. Mr. Lee said Korea Investment & Securities reported Hyundai Steel’s sales is 10.767 trillion won in 2008 and the operation profit is 1.371 trillion won in 2008, the sales is expected to be 7.75 trillion won and the operation profit is expected to be 737 billion won.

He said Hyundai Steel will invest around 2 trillion won to blast furnace construction in 2009 and will finish the construction at the end of 2009. Mr. Lee explained the firm forecasts world steel market price rebounds from the last half of 2009 or the fist half of 2010, the firm is progressing the blast furnace construction and doesn’t consider shelving the operation period of the blast furnace. Mr. Lee said the firm will decide the timing of the investment for no.3 blast furnace construction with economic situation after the construction of no.2 blast furnace.

Mr. Lee said the firm plans to increase the export by about 10% to 2.21 million tonnes for mainly Europe, South East Asia, Middle East and USA in 2009 when domestic demand is weak, the firm plans the sales volume at about 9.7 million tonnes for domestic and export market in 2009.

Mr. Lee said the firm doesn’t have the plan to invest the mine when the firm contracted with major material suppliers and assured material such as iron ore or coal. Mr. Lee said the firm plans to use domestic ferrous scrap and imported scrap when South Korean ferrous scrap supply volume is shortage by the nature.