Seoul: South Korea's steel shipments to the United States experienced a significant decline of more than 16 percent in May compared to the previous year. This reduction is attributed to the imposition of steep tariffs by the U.S. government on steel and aluminum imports, which also led to a decrease in export prices by over 9 percent.
According to Yonhap News Agency, the U.S. government started enforcing a 25 percent tariff on all steel and aluminum imports on March 12 and increased the rate to 50 percent on June 4. As a result, South Korea's steel exports to the U.S. fell 16.3 percent, amounting to $327 million in May, down from $390 million a year earlier. Additionally, export unit prices decreased by 9.4 percent to $1,295 per ton from $1,429 during the same period, reported the Korea International Trade Association (KITA).
A KITA official stated, "U.S. steel tariffs appear to have begun affecting Korean steel shipments in May, as domestic steelmakers lowered their export prices last month to maintain a certain level of exports to the U.S." Industry officials anticipate that the higher tariffs will have a more pronounced impact on Korean steelmakers in the second half of the year. The increased rates are expected to make Korean steel products less competitive in the U.S. market, with local clients potentially opting for more price-competitive suppliers.
The situation is further compounded by Nippon Steel's acquisition of U.S. Steel, which is anticipated to negatively impact Korean steel exports to the U.S. starting next year. In response to these challenges, South Korea's leading steelmakers, POSCO Group and Hyundai Steel Co., are exploring strategies to mitigate the effects of the steep tariffs on their operations.
In March, Hyundai Steel announced a plan to invest $5.8 billion in constructing an integrated, electric arc furnace-based steel mill in Louisiana by 2029, with production set to commence that year. POSCO has also decided to invest in Hyundai Steel's U.S. steel mill project.