SEOUL :South Korea’s Hyundai Steel will invest $5.8 billion along with Hyundai Motor Group to build a steel plant in the U.S. state of Louisiana with an annual capacity of 2.7 million tonnes, the company said in a regulatory filing on Tuesday.
Hyundai Steel shares initially jumped more than 5 per cent on the news but reversed early gains to end 7 per cent lower as U.S. President Donald Trump praised the company’s plan.
Hyundai Steel’s proposed new U.S. steel plant is part of Hyundai Motor Group’s plan to invest $21 billion in the United States, which was announced by the South Korean company’s chairman with Trump at the White House on Monday.
The move is seen as an effort by Hyundai to shield itself from U.S. tariffs on steel and cars, but it is not clear whether this will help secure exemptions for Hyundai and South Korea.
Trump has threatened to impose reciprocal tariffs on numerous countries on April 2, potentially targeting South Korea that has a large trade surplus with the United States.
Shares of Hyundai Motor and affiliate Kia Corp, which are expected to source steel from the proposed factory, rallied. Hyundai Motor shares ended up 3.3 per cent after rising as much as 7.5 per cent to their highest since October 2024. Kia closed up 2.1 per cent.
Analysts have, however, expressed concerns about how Hyundai Steel, which has billions of dollars in debt, would fund the construction of the factory. There are also execution risks associated with the new technology of using electric furnaces to produce automotive steel, they said.
“It is not clear whether the investment will benefit Hyundai Steel in the future,” said Lee Tae-hwan, an analyst at Daishin Securities.
Hyundai Steel said it will cover half the costs, with the remainder invested by its parent company and other investors.
The factory, which will make automotive steel, will be constructed from 2026 to 2029, the company said.
Hyundai Steel is an affiliate of automakers Hyundai Motor and Kia Motors which have factories in the United States.
