South Korean steel maker POSCO reportedly will boost business ties with Hyundai Motor and affiliate Kia Motors after the recent opening of a new automotive steel plant in the country, company officials told the Korea Herald.
Sales to Korea's largest and second largest automakers have been declining since 2010 when another Hyundai Group affiliate, Hyundai Steel, began producing auto steel plates for the two car making units.
POSCO has been supplying auto plates mostly to GM Korea, Renault Samsung Motors and Ssangyong Motor, and to automakers operating plants outside Korea, the Korea Herald said.
The report said the world's fourth-largest steelmaker plans to restore its once close ties with Hyundai and Kia by supplying 'Giga steel' which it claims is as light as aluminium but almost three times stronger.
For the first time, the steelmaker will hold an exhibit next month at Hyundai Motor's research centre in Hwaseong, Gyeonggi Province, to showcase its Giga steel products and other technology. For years, it has been holding the event only with GM Korea, Renault Samsung and Ssangyong.
POSCO also recently re-established a marketing team dedicated to dealing with Hyundai and Kia.
"We always have strong business relationships with Hyundai and Kia and would like to take it to the next level," a POSCO official told the Korea Herald.
"We are positive that the carmakers can produce more fuel efficient, reliable and safe vehicles if they use our automotive steel plates. We will make every effort to provide products and services that our business partners need."
According to the paper, in 2016, POSCO produced about 9m tonnes of auto steel plates in and outside South Korea, accounting for 10% of global demand. Of this, the company was estimated to have supplied about 800,000 tons to Hyundai and Kia.
The opening of the Giga steel plant in Gwangyang, South Jeolla Province, in April 2017 prompted the steelmaker to sign larger supply contracts with the two carmakers. The new facility is capable of producing 500,000 tonnes annually, the Korea Herald said.
In contrast, Hyundai Steel is moving to reduce its dependence on Hyundai and Kia by striking supply deals with other carmakers as it expands its production capacity.
Last year, it churned out nearly 5 million tons of automotive steel plates, most of which were supplied to its two sister companies. Given the sluggish sales of Hyundai and Kia in recent months, the steelmaker is feeling greater pressure to find new buyers.
"While maintaining a close partnership with Hyundai and Kia, we have been trying to discover new business opportunities with other global carmakers," a Hyundai Steel official said. "We are now building an automotive steel plant capable of producing 500,000 tons annually in Suncheon, South Jeolla Province. To run the plant, we need to secure new supply deals with other automakers."
By 2020, the company plans to sell at least 1 million tons of auto plates to non-Korean carmakers.