| DANGJIN, South Korea, Sept 13
DANGJIN, South Korea, Sept 13 South Korea's
Hyundai Steel fired up its third blast furnace on
Friday as it seeks to grasp market share from POSCO
and Japan in the alloy used to make cars and ships, sparking
fears about over-supply amid weak demand.
Hyundai Steel started its first blast furnace in 2010,
breaking POSCO's dominance and offering stable supplies to
affiliates - Hyundai Motor and Kia Motors
, which together rank fifth in global auto sales.
Hyundai Steel, part of the Hyundai Motor Group owned by
chairman Chung Mong-koo, said the new blast furnace had boosted
its annual production capacity by 4 million tonnes to 12 million
Including electric arc furnaces with a capacity of 12
million tonnes, Hyundai Steel has a total capacity of 24 million
tonnes, making it the world's 11th largest steelmaker, up from
31st in 2006.
But the latest, $3.4 billion facility also rekindles concern
"I'm not that worried about a supply glut in autos, but the
shipbuilding sector is a different matter. Demand from
shipbuilders has crumbled and the new facilities will exacerbate
supply," said Kim Kang-oh, an analyst at Hanwha Securities.
Hyundai Steel shares have fallen 6 percent so far this year,
despite bouncing back since late June.
Hyundai Motor and Kia are the only major automobile groups
with steelmaking units. They used to source steel from POSCO and
Japanese carmakers before Hyundai Steel started its first blast
"The third blast furnace will be a further threat to POSCO,
which faces a challenge of boosting sales to overseas
automakers," said Choi Moon-sun, an analyst at Korea Investment
With an operating margin of 6.2 percent last year, Hyundai
Steel was more profitable than bigger rival POSCO, China's
BaoSteel and Japan's Nippon Steel & Sumitomo Metal
, according to Reuters Starmine data.
($1 = 1,086 won)
(Additional reporting by Ruby Lian in SHANGHAI; Editing by Nick