(2nd LD) Hyundai Steel starts its first-ever integrated furnace

(ATTN: ADDS quotes from chairman in 4th para, POSCO's capacity in 10th para; UPDATES
stock price in 6th para)

DANGJIN, South Korea, Jan. 5 (Yonhap) -- Hyundai Steel Co., South Korea's No.2
steelmaker, on Tuesday started its first-ever integrated blast furnace in this
southwestern coastal city after a three-year construction period.
The company plans to start in April the commercial operations of the first blast
furnace that has an annual production capacity of 4 million tons of steel
products, according to Hyundai Steel.
Once finished, the plant, the nation's third integrated steel mill which houses
two blast furnaces, will churn out a total of 8 million tons of steel products
annually, including 6.5 million tons of hot-rolled steel sheets. The second blast
furnace is still under construction with completion due for next year.
"We should redouble efforts to make the steel mill the most competitive in the
world," Hyundai Motor chairman Chung Mong-koo said in a speech at a ceremony
marking the operation of the first furnace.
Following the completion of the second blast furnace, Hyundai Steel expects it
will have an annual capacity of around 20 million tons. Hyundai Steel is
currently only equipped with electric furnaces that produce some 11 million tons
of steel annually, using scrap metal.
Steel used for construction accounts for around 70 percent of its sales.
Shares of Hyundai Steel were trading at 91,300 won on the Seoul bourse as of 2:20
p.m., up 0.66 percent.
"Hyundai Steel is positioned to benefit from its increased production and a
recovery in the global sector," said Kim Kyong-choong, an analyst at Samsung
Securities. "From February, prices of scrap steel and steel beams will rise by
around 10 percent."
Hyundai Steel, the unit of Hyundai Motor Group, took over the facility from
now-defunct Hanbo Iron & Steel Co. in 2004. Building an integrated steel mill is
known to have been a long-time dream for Hyundai Group, since the days of late
Hyundai founder Chung Ju-yung.
Previous attempts in 1977, 1994 and 1997 were unsuccessful due to difficult
economic conditions and the vast amounts of money needed.
Hyundai Steel said earlier around 5.8 trillion won (US$5 billion) will be
invested until 2011 in the two furnaces, which will help the steelmaker make
high-quality products such as automotive steel and plates used for ships to
compete with bigger rival POSCO, which has an annual capacity of 33 million tons.
Hyundai Motor Group, which owns the nation's two largest carmakers, is expected
to be one of the key beneficiaries of the mill, as its production will secure a
stable supply of steel for auto manufacturing.
Although POSCO, the country's leading steelmaker, supplies about 40 percent of
South Korea's steel needs, the country still imports the remaining steel because
the world's fifth-largest steelmaker has been the only steelmaker that has an
integrated steel mill.
South Korea is the world's sixth-largest steelmaking country, but still imports
20 million tons of steel products. In 2008, the country imported 28.94 million
tons of steel.
According to Hyundai Steel, the furnaces are expected to replace $8 billion worth
of steel imports a year.
Hyundai Steel said earlier it plans to additionally build a third blast furnace
by 2015, which will increase its total annual production capacity to 12 million
tons.
sam@yna.co.kr
(END)

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