South Korean metallurgists restructure business in China

South Korean steelmakers in China are restructuring their businesses to improve their profitability amid the global economic downturn and lower product prices.

For example, Hyundai Steel plans to consolidate its service centers in Beijing and Tianjin to reduce headcount and apply the same measures in its offices in Shanghai and Suzhou. The company currently operates nine commercial enterprises in China and plans to reduce the number to seven in the interest of business efficiency.

Its sluggish business in China is linked to Hyundai Motor Group's business in the same market. Hyundai Motor's wholesale sales in China fell 17.7% to 650,000 units in 2019, while Kia Motors fell 17.1% to 296,000 units in the same period.

Dongkuk Steel, which is posting a net loss in China, is set to sell a portion of its local corporation. The net loss for the first three quarters of 2019 was 7.5 billion won and the company plans to undertake a financial restructuring with a local steelmaker as an investor. Dongkuk Steel's manufacturing facilities in China are located in Jiangying and Wuxi, and the continued stagnation of the non-ferrous steel sheet market for years has negatively impacted its business.

Meanwhile, POSCO sold POSCO Guangdong Coated Steel last year. Established in 1997, the galvanized steel sheet factory had a net loss of 7.9 billion won, 21 billion won, 2.4 billion won and 11 billion won, respectively, in 2012-2015.

Profits from the sales and operation of SeAH Special Steel, which has factories in Nantong and Tianjin, are falling as the Chinese auto industry shrinks. The company has tried to cope with the situation by diversifying its customers since 2014.