Hyundai Steel's Ambitious Global Strategy: Rising to the Top of Automotive Steel
Hyundai Steel, a key subsidiary of Hyundai Motor Group, has cemented its position as a growing force in the global automotive steel industry. With a focus on high-value-added products like automotive steel sheets, the company is progressively expanding its market share and global footprint. In 2023, Hyundai Steel achieved a major milestone, surpassing 1 million metric tons of automotive steel sheets sold to non-affiliated global automakers, a first for the company since the completion of its flagship Dangjin Steelworks facility in 2010.
The company’s focus on automotive steel has grown over the years, and in 2023, around 20% of the 5 million metric tons of automotive steel sheets produced by Hyundai Steel were sold to global automotive companies. This figure highlights the company’s transition from a primarily domestic supplier to a key player in the global automotive steel market. This strategic shift is crucial for Hyundai Steel as it reduces its dependence on its affiliated brands, Hyundai Motor and Kia, and expands its reach to a diverse set of customers around the world.
Global Expansion and Diversification Strategy
In 2017, Hyundai Steel made a pivotal decision to expand its operations beyond Korea. The company began strategically targeting non-affiliated global automakers to diversify its customer base and ensure long-term revenue stability. Prior to this, Hyundai Steel was heavily reliant on Hyundai Motor and Kia, with much of its production earmarked for the domestic automotive market. As a result of the 2017 expansion, Hyundai Steel has seen its external sales ratio rise steadily from 16% in 2021 to 17% in 2022, and 18% in 2023.
Today, Hyundai Steel supplies 25 global automotive brands, including General Motors, Ford, Renault, Nissan, Volkswagen, and Fiat Chrysler Automobiles. This diverse clientele reflects Hyundai Steel's growing presence in the global market. As the company pushes forward with its goal of becoming one of the top three automotive steel suppliers globally, it is focusing on increasing its external sales to approximately 2 million metric tons by 2025.
The increasing demand for lightweight, high-strength automotive steel is a driving force behind Hyundai Steel’s decision to diversify its sales. With automotive steel accounting for more than 40% of the company’s total sales revenue, Hyundai Steel aims to capitalize on the growing global need for advanced automotive materials that cater to stringent environmental and performance standards.
Automotive Steel: A High-Value Market Segment
Automotive steel sheets are highly specialized products that cater to the needs of the automotive industry, especially with the growing emphasis on fuel efficiency, safety, and lightweight vehicles. These products generate stable, long-term revenues for Hyundai Steel, largely due to the nature of the long-term contracts between automakers and steel suppliers. As car manufacturers aim to reduce vehicle weight and carbon emissions, automotive steel is an essential component in achieving these goals.
Hyundai Steel's decision to ramp up its focus on automotive steel comes at a crucial time as the steel market faces pressures from the construction industry, which has been stagnant in recent years. Automotive steel provides Hyundai Steel with a more stable profit source, as the industry’s demand remains relatively robust, even amid challenges in other sectors.
Driving Innovation in Carbon-Reduced Steel Production
As environmental sustainability becomes a priority for governments and industries worldwide, Hyundai Steel is positioning itself as a pioneer in carbon-reduced steel production. The company’s vision for the future includes a substantial reduction in the carbon footprint of its steel manufacturing processes, in line with global decarbonization efforts. This vision is particularly crucial for Hyundai Steel’s automotive steel business, as automakers are under increasing pressure to reduce the environmental impact of their manufacturing processes.
In 2024, Hyundai Steel is set to launch carbon-reduced automotive steel sheets that will be essential for helping automakers meet the increasingly stringent emission reduction regulations. The company plans to achieve this by employing a hybrid production process that combines electric arc furnaces (EAF) with blast furnaces. This new process aims to reduce emissions significantly while improving profitability.
The new production process will be implemented at Hyundai Steel’s Dangjin Steelworks, where an existing thin hot-rolled steel plant, inactive since 2020, will be converted into a low-carbon automotive steel sheet factory. This factory will be at the heart of Hyundai Steel's green transition, ensuring that the company stays ahead of the competition while minimizing environmental impacts.
Hyundai Steel's proprietary “Hy-Cube” carbon-neutral production system will play a key role in this initiative. This system will utilize a unique combination of steel scrap, direct reduced iron, and molten metal produced from blast furnaces, significantly reducing the need for traditional carbon-intensive steel production methods. By adopting this innovative system, Hyundai Steel not only demonstrates its commitment to sustainability but also ensures that it remains competitive in an increasingly eco-conscious market.
Next-Generation Automotive Steel Sheets: A Leap Forward in Strength and Malleability
In addition to its focus on sustainability, Hyundai Steel is also pushing the envelope in terms of material performance. The company has completed the development of third-generation automotive steel sheets, which are 20% stronger than traditional steel sheets. These advanced steel sheets retain the malleability required for the automotive manufacturing process, providing a balanced solution for automakers who need both strength and flexibility in their materials.
The new third-generation steel will be crucial for manufacturers looking to meet the demands of lightweight vehicles, including electric vehicles (EVs) and autonomous vehicles. As the automotive industry increasingly shifts toward these advanced vehicle types, stronger and lighter materials will be required to maximize performance, safety, and energy efficiency.
Hyundai Steel plans to commence commercial production of these next-generation automotive steel sheets in 2024. This will allow the company to stay ahead of the curve, offering innovative solutions to automakers looking for ways to improve vehicle efficiency while maintaining high safety standards.
Key Takeaways
•Hyundai Steel achieved a significant milestone in 2023 by selling over 1 million metric tons of automotive steel sheets to non-affiliated global automakers.
•The company aims to increase its automotive steel sales to approximately 2 million metric tons by 2025, targeting a top three position in the global automotive steel market.
•20% of Hyundai Steel's total 5 million metric tons of automotive steel production in 2023 was sold to non-affiliated global automakers, including General Motors, Ford, Renault, and others.
•Hyundai Steel’s external sales ratio has steadily increased, growing from 16% in 2021 to 18% in 2023, with a target to surpass 20% in 2024.
•Automotive steel sheets account for more than 40% of Hyundai Steel’s total sales revenue, making it a high-value, stable revenue stream.
•Hyundai Steel is set to begin commercial production of carbon-reduced automotive steel sheets in 2024, using a hybrid process of electric arc furnaces and blast furnaces.
•The company has developed third-generation automotive steel sheets that are 20% stronger than traditional steel sheets while maintaining high malleability, set for commercial production in 2024.
•Hyundai Steel's proprietary “Hy-Cube” carbon-neutral production system will enable the company to significantly reduce emissions while maintaining product quality and competitiveness in the market.
