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Hyundai Steel announces US plant plan and shares skid

Hyundai Steel announces US plant plan and shares skid

Hyundai Motor Group and Hyundai Steel, both of South Korea, will invest $5.8 Billion to build a steel mill in Louisiana in the U.S. with a capacity of 2.7 Million tonnes per year. The company announced this in a filing with the regulatory authorities on Tuesday.

Hyundai Steel shares rose initially by more than 5%, but they reversed their gains and ended 7% lower after U.S. president Donald Trump praised its plan.

Hyundai Steel's new U.S. Steel plant is part the Hyundai Motor Group plan to invest $21 Billion in the United States. The South Korean company's Chairman announced the plan with Trump on Monday at the White House.

Hyundai is attempting to protect itself from U.S. steel and car tariffs, but it's not clear if this will result in exemptions for South Korea and Hyundai.

Trump has threatened reciprocal tariffs against a number of countries on April 2. This could include South Korea, which has a large surplus in trade with the United States.

The shares of Hyundai Motor, and its affiliate Kia Corp., who are expected to be sourcing steel from the proposed plant, have rallied. Hyundai Motor shares closed up 3.3%, after reaching their highest level since October 2024. Kia shares closed down 2.1%.

Analysts, however, have expressed concern about how Hyundai Steel would finance the construction of the new factory, given that it has billions in debt. They said that there are execution risks with the new technology for using electric furnaces in order to produce automotive steel.

Analyst Lee Taehwan at Daishin Securities said that it was not certain whether the investment would benefit Hyundai Steel.

Hyundai Steel has said that it will cover the cost of half, and the rest will be invested by the parent company as well as other investors.

The company stated that the factory will produce automotive steel between 2026 and 2029.

Hyundai Steel is a subsidiary of Hyundai Motor, Kia Motors and other automakers with factories in the United States. (Reporting and editing by Hyunjoo Ji, Jihoon Le and Hyunsu Yaim; Himani Sarkar).

(source: Reuters)