SeAH, POSCO Embrace

Two steelmakers to jointly set up steel pipe plant in U.S. under cooperative tie-up

SeAH Steel and POSCO forged an alliance over the production of American Petroleum Institute(API) specification steel plates and other products in the areas
The steelmakers have a 30-year relationship going on as a supplier of raw material and the other as a customer with each boasting best competitive production technologies for steel plates and pipes in the world, creating synergy effects for two partners.
The API specified steel pipes means that they will withstand minus 40 degree Centigrade pressure and won't get rusty. POSCO has been focusing on the production of those steel plates for automobiles. POSCO has been having difficulties with API projects holding biddings for steel pipes, not steel plates and steelmakers in Japan and Europe equipped with the production facilities for steel pipes. With the arrangement with SeAH, POSCO will now be able to boost its competitive edge in marketing hot-rolled coil with API specifications.
Under the tie-up, SeAH Steel will be able to produce high-grade steel products such as special steel pipes, and stainless steel pipes, securing competitive edge over its Chinese rivals in addition to general steel pipes used by construction firms.
SeAH Steel Chairman Lee Woon-hyung said the alliance with POSCO will be further developed as both steel makers complement each other in various steel business areas, especially when the projected steel plant for API pipeline steel plates is completed in the United States. SeAH and POSCO plan to jointly build the steel plant in the U.S. aimed at supplying steel pipes to the U.S. steel market, which is a fast growing market for API specification steel pipes, which require the quality to withstand minus 40 degree Celsius cold weather and don't get rusty.
The SeAH chairman said the company will plow in some 300 billion won in new investment this year, following some 900 billion won invested last year to expand each affiliate company's production facilities and improve environment. About 90 percent of the investment allocated for this year will go to the group's domestic facilities. Many firms he said, made investments abroad, to escape from the sluggish domestic economy. But SeAH focused on its domestic operations, while trying to improve exports abroad and other activities overseas were intended to strengthen the group's domestic competitiveness. He said the company believed that it has to be strong in its domestic operations first and then go abroad to set up operations and achieve success.
But, he said, the efforts made to strengthen its domestic operations will run into strong challenges, one of them being those from China, which has been turned into a factory zone for the world. Korea would be one of the prime targets for Chinese businesses without a doubt with China being put in a difficult position due to its excess trade surplus with the United States and not able to increase its product shipment to the U.S. as it used to in the past.
Korea would be hurt badly from Chinese exports, especially in the area of low priced products and low value-added products, not able to beat Chinese products in prices. Another challenge is the depreciation of Japanese yen, making Japanese high-quality products competitive with Korean products both in Korea and overseas. Korea's high quality products and high value-added products have been losing competitive in the past several years
We have to competition with both Japanese and Chinese products at home and abroad to continue to sustain the growth of our economy, he said.
SeAH will be able to come out the winner from this tough competition based on its strength gained in the past several years through massive investment and prepared capacity, the chairman promised.
The development of new products carried out by SeAh affiliates and the improvement activities to make production systems highly effective will provide measures to fight off these challenges, he said.
As Japanese business firms have done to survive from the high valued yen and recovered their production competitiveness, we can do it too and win over any challenges in our ways and be competitive. nw

SeAH Steel Chairman Lee Woon-hyung