Vice Chairman Woo Yoo-cheol of Hyundai Steel said the steelmaker should be a fast mover rather than a “fast follower” in his congratulatory speech to celebrate its 62nd anniversary on June 10.
The vice chairman said that this year Hyundai Steel and Hyundai Hysco will be fully merged, which will add overseas steel service centers and the ability to lighten steel products. The steelmaker’s total assets will be increased to 31 trillion won, ranking it among the top integrated steel makers in the world, a very significant development in the annals of the steel maker’s history.
Hyundai Steel took over Dongbu Special Steel last year and launched Hyundai Integrated Special Steel. It is now awaiting approval from the Fair Trade Commission on the takeover of SPP Yulcheon in a move to continue to push to expand Hyundai Steel’s operation. Hyundai Steel’s special steel plant will conduct a trial run in November this year.
The vice chairman said the global steel industry continuous to go in its operations. The Korean steel industry is holding its own against competition from Chinese steelmakers and Japanese steelmakers. However the low Japanese currency is making life harder for Korean steelmakers.
Nevertheless, the steelmaker should complete its management targets to boost its performance results as projected, overcoming various difficulties along the path through integration and communication. Ultimately, the business structure will be more competitive, the organization more solid, and customer success will be achieved; those are the three major management targets that will be pursued in earnest.
The vice chairman also said the steelmaker should establish a new corporate culture for a great integration as the steelmaker took over a number of other companies, including Kangwon Industry and Hanbo Steel. The mergers have been a great success. The two steel makers with different corporate cultures now operate in harmony under one umbrella known as Hyundai Steel. Now the steel maker is engaged in the process of taking over Hyundai Hysco and SPP Yulchon, and a successful outcome would depend on how harmoniously the officers and staff of the companies cooperate with each other.
“When we can integrate those different factors and create an organizational culture through them, we will be able to jump high enough to be a top steel maker in not only in hardware, but also in software as well as we have always hoped to be,” Vice Chairman Woo stressed. “In order to be able to create a successful integrated organizational culture, we have to communicate with each other with open minds as much as we can.”
The first step toward the goal is to secure safety at work places, because safety accidents could make the achievements we make moot in a matters of seconds, he added. “It is a misfortune that can never be made up for all of us. Surrounded by our safety walls are not only officers and staff themselves but their families, cooperative firms, their officers and staff, especially, those who visit our work places,” Vice Chairman Woo said.
In the meantime, the steel maker is expected to make a profit in the second quarter, aided by sales of steel rods and section steel, which have been spurred by the revived real estate market, along with cuts in the prices of raw materials. The company expects to see its Q2 sales hit 4.2 trillion won and an operating profit of 443.7 billion won, down 3.99 percent year-on-year, and up 17.5 percent year-on-year, respectively.
A huge rise in the sales of steel rods and steel sections would be a big reason for a boost in operating profit, with the sales of rod steel hitting more than 801,000 tons for the past three months in a row with H section steel sales rising to from 270,000 tons to 280,000 tons in May and expected for June.
At the same time, the prices of scrap iron, iron ore and coal fell. According to the Korea Material Information Service, the price of coal fell to around $58 per ton, with the price of iron ore falling to $63 per ton in June from around $73 per ton in the previous months.
The price of scrap iron being used as a raw material for rod steel also fell to 225,000 per ton, about 30 percent lower year-on-year. More help is on the way for the rod and section steel products from the fact that Chinese H section steel — which is much cheaper than Korean steel rods — will be charged with import duties ranging from 28 to 32 percent for the next five years as decided by the Korea Trade Committee.
Still more good news is that Hyundai Steel would have some 150 billion won worth of synergy in terms of sales created when its merger with Hyundai Hysco is officially completed on July 1.
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