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South Korean steelmakers eye US production, higher-value products as Trump tariffs kick in
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Rolled steel is seen at a Hyundai Steel plant in Dangjin, about 130 km southwest of Seoul, on June 15, 2011. (Reuters/Lee Jae-Won)
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wo major South Korean steelmakers are considering their investment options in new facilities as major producers worldwide brace for increased tariffs on US steel and aluminum imports that came into force on Wednesday.
The options include investment in operations in the US, they said, although no final decisions had been made.
US President Donald Trump's action to bulk up protection for American steel and aluminum producers restores effective global tariffs of 25 percent on all imports of the metals and extends the duties to hundreds of downstream products made from the metals, from nuts and bolts to bulldozer blades and soda cans.
The countries most affected by the tariffs are Canada, the biggest foreign supplier of steel and aluminum to the US, Brazil, Mexico and South Korea, which all have enjoyed some level of exemptions or quotas.
"We plan to focus more on high-value-added products and enhance our technological capabilities to produce existing products more economically," a spokesperson for South Korean steelmaker POSCO Holdings said.
"We are also reviewing investment plans for upstream steel processes in the US or India, but no final decision has been made yet," the spokesperson said.
Local rival Hyundai Steel is considering building a steel factory in the Southeastern part of the US but nothing has been decided, a spokesperson said, adding the increased US tariff would have negative impact on the Korean steel industry.
South Korea previously benefited from a duty-free steel quota under an agreement made in 2018 during Trump's first term as president.
Its trade ministry said on Wednesday the government will prepare measures that would include supporting domestic firms' investment overseas and expansion into new markets.
Other firms with less exposure to the US market or with major manufacturing presence there hoped the increased tariffs would lift steel prices.
"As the US tariffs come into effect, the company expects to see the positive impact from an improvement in steel prices," a spokesperson for Australia-listed steelmaker BlueScope said.
The company produces more than 3 million tonnes of steel a year at its plant in Delta, Ohio, but exports just 300,000 tonnes a year to the US. The spokesperson added that the company was disappointed that Australia had not received an exemption.
Australia's Prime Minister Anthony Albanese said on Wednesday his country will not impose reciprocal tariffs on the US due to potential impact on inflation, and he would continue to lobby the US administration for a reprieve.
The BlueScope spokesperson said the company is working closely with "the Australian trade and diplomatic staff in Canberra and in Washington DC, and with a wide range of senior representatives in Congress to ensure the BlueScope investment proposition is fully understood."
In Vietnam, the fifth largest steel exporter to the US, traders said the new tariffs might benefit local companies, as most of them had been slapped with 25 percent levies in 2018.
"I think Vietnam steel may benefit from this tariff," a Hanoi-based steel trader said, declining to be named because he was not authorized to speak to media.
