South Korea: Hyundai Steel unveils aggressive cost-cutting strategy

• Move comes amid US tariffs, weak domestic demand
• Executives face 20% pay cut, effective immediately

Hyundai Steel Co., South Korea’s second-largest steelmaker, has activated an emergency management mode in response to escalating challenges. The company is facing significant pressure from the US imposition of 25% tariffs on steel and aluminium, weakened domestic demand, and rising competition from Chinese and Japanese steelmakers, prompting the company to adopt emergency cost-saving strategies.

To mitigate these challenges, Hyundai Steel’s executives have taken a 20% pay cut, effective immediately. The company is also contemplating a voluntary retirement programme for employees and implementing other cost-cutting measures, including minimising overseas travel.

These actions reflect the intense pressure facing the South Korean steel industry. Hyundai Steel has already reduced production at its Pohang plant due to declining domestic construction demand. On 24 February 2025, the company suspended operations at its cold-rolled steel facility in Dangjin.

Furthermore, the company faces increased competition from low-cost steel imports from China and Japan, which are impacting its market share. The US steel tariffs, which went into effect this week, have further exacerbated the company’s situation. Hyundai Steel emphasised that robust self-rescue measures are necessary to improve its financial situation amid the severe domestic and global crises.

The company has been engaged in prolonged wage negotiations with its labour union since September 2024, with discussions stalled over issues such as performance bonuses, resulting in multiple strikes and disrupted production.

Outlook

With Hyundai Steel in emergency management mode, the company may see further cost-cutting measures. Issues such as US steel tariffs, weak domestic demand, and labour disputes will likely continue to adversely affect Hyundai Steel in the immediate future, exacerbating the company’s financial struggles. Hyundai Steel’s ability to implement effective self-rescue measures will be crucial in determining its future success and competitiveness in the domestic steel industry.