South Korea's Hyundai Steel Hit by 'Guerrilla Strike'

The letter was signed by J.Y. Sim, general manager of the company’s cold-rolled products sales team. It was not immediately clear to SMU whether the strike, which the company said began on March 6, would impact other product lines as well.

Hyundai Steel did not immediately respond to a request for clarification from SMU on Thursday, March 18.

“The strike, which is beyond our control, is resulting in suspension of production in different production lines at various times of the day.” Hyundai Steel as a result has “no choice but to notify our customers” of a “definite” approximately 1.5-month delay, Sim wrote.

Hyundai also noted that the labor unrest was occurring against a backdrop of “soaring raw material prices” and increasing production costs that have become a “burden” for steelmakers.

The “rogue” strike is not impacting all business units there equally, one trader source said.

The cold-rolled division and hot-rolled division are separate, and the strike doesn’t always occur in the same place at the same time. It might impact a hot rolling mill one day and plate operations the next. Melt operations have not been impacted, he said.

Hyundai is correct that the unpredictable nature of the strike makes it difficult to assess its impact. One likely result: Hyundai, which would normally be making new offers this time of month, will probably not be able to because of the uncertainty created by the strike, the trader said.

The company makes a full range of steel products including not only flat-rolled goods such as hot-rolled coil, cold-rolled coil and plate but also reinforcing bar, steel pipe and automotive parts.

The labor action could be significant in the U.S. because South Korea is one of the top foreign steel suppliers to the domestic market.

The U.S. imported 1.83 million tonnes of steel from the U.S. in 2020. Only Brazil, Canada and Mexico sent more steel to domestic ports last year, according to U.S. Commerce Department figures.

It is also important because South Korea, unlike most other nations, is subject to a Section 232 quota rather than the 25% tariff that most other nations face.

A potential loss of some tariff-free foreign supply comes at a time when U.S. prices are at record highs amid scarce spot tons, limited contract availability and extremely long lead times at domestic mills.

And such issues are not confined to the U.S. Case in point: Much of the world is grappling with port congestion, which has resulted in higher freight rates and delayed shipments.

By Michael Cowden, Michael@SteelMarketUpdate.com