"Market conditions in the United States are not expected to change much after the second quarter. We are gradually increasing export volumes in line with market conditions." (Hyundai Steel first-quarter earnings conference call)
"Warning signs are emerging that imports of Korean steel in the United States are increasing. We do not expect the sharp export growth seen in the first half to continue." (Hyundai Steel second-quarter earnings conference call)
With caution rising in the United States over increasing imports of Korean steel, some say Korea's steelmakers could see their exports to the United States slowed. In the first half, the United States absorbed nearly 90% of Korea's rebar exports among Korean steel products, serving as "welcome rain in a drought" for the slumping domestic electric arc furnace sector.
Hyundai Steel, for its part, said as recently as April, when it released first-quarter results, that it expected U.S. rebar demand to continue and that it would keep expanding exports. But at the early-July second-quarter results briefing about three months later, it noted growing concern in the United States over rising imports of Korean steel products and struck a cautious tone on whether export growth would continue.
According to the Korea Iron & Steel Association on the 10th, second-quarter rebar exports to the United States were 207,822 tons (t), down 24.6% from the first quarter (275,727 t). First-quarter exports to the United States jumped 228 times from a year earlier, but in the second quarter the year-over-year increase was about 16 times, far lower than in the first quarter.
By month, rebar exports to the United States fell from around 110,000 t each in January–February to 94,155 t in April and further to 39,955 t in July.
The United States was a major sales channel the sluggish domestic electric arc furnace sector had finally found. Rebar is a construction bar, and construction sites such as apartment projects are its main demand source, making it a representative domestic product. But starting in 2024, Korea's construction market froze rapidly and demand fell sharply. Last year, rebar prices dropped below the breakeven point. Even when prices for ferrous scrap, the raw material, rose first, product prices failed to keep up, leading to a vicious cycle in which losses deepened with each sale.
Amid this, an opportunity emerged in the United States. As investment in data centers and power infrastructure grew there, local steel demand and prices surged. Even though a headwind hit when the United States in June last year raised the tariff under Section 232 of the Trade Expansion Act on imported steel from 25% to 50%, the rise in local steel prices offset the tariff burden.
Hyundai Steel said on its first-quarter conference call in April that "with steel prices in the United States rising sharply, exports are viable even considering the 50% tariff." Riding that tailwind, about 89% of the 540,611 t of rebar Korea shipped overseas in the first half went to the United States.
The shadow over the domestic steel industry's optimism about exports to the United States stems from growing wariness in the U.S. over the surge in Korean shipments. From December last year to June this year, Korea was the country from which the United States imported the most steel each month. From January to April this year, the United States' average monthly intake of Korean steel rose 32.3% from a year earlier. Rebar in particular jumped 2,298%, the biggest increase among Korean items. Steel Market Update (SMU), a U.S. steel trade outlet, also noted, "The largest increase in Korea's exports to the United States was in rebar."
With moves in the United States to closely watch the recent increase in Korean steel imports, domestic electric arc furnace makers are busy assessing trade risks. Within the scope of hedging risk as much as possible, they are seeking more export opportunities across a wider range of products while also diversifying their U.S. business through local production. Hyundai Steel plans to hold a groundbreaking ceremony on Sept. 4 for an electric arc furnace steel mill in Louisiana with an annual capacity of 2.7 million t.
An official at a domestic steelmaker said, "Rather than relying solely on rebar exports, we are expanding our U.S. business by diversifying our product mix to items such as steel pipe and H-beam and by establishing a local production base."