POSCO breaks ground on China automotive steel plant with HBIS

China’s HBIS Group Co., the world’s third-largest steelmaker, and South Korea’s POSCO Co., the No. 6 player, broke ground on an automotive steel sheet plant in the mainland to target the global top automobile market.

HBIS and POSCO started the construction of the plant with a production capacity of 900,000 tons of galvanized steel sheets a year in Tangshan City in Hebei Province, according to South Korea’s largest steelmaker on Jan. 7. The construction is to be completed by the end of 2023.

In September 2021, HBIS, China’s No. 2 steelmaker, and POSCO set up a 50:50 joint venture for production and sales of automotive steel sheets in China with an investment of $300 million each.

“The joint venture must play its role as a global automotive steel sheet maker leading eco-friendly business,” said POSCO Chairman and CEO Choi Jeong-woo in a groundbreaking ceremony held online. Choi asked to upgrade the level of automotive steel sheet production innovatively based on the expertise and experience of the two companies.

HBIS produced 44 million tons of molten iron in 2020, while POSCO churned out some 40 million tons.

The JV incorporated Guangdong CGL, which POSCO has been operating to roll out 450,000 tons of steel sheets a year since 2013, as a subsidiary around the end of last year. As a result, the JV is set to secure a total annual capacity of 1.35 million tons. HSBI and POSCO plan to supply the cold-rolled coil by half each to the JV.

With cooperation with HBIS, POSCO aims to meet the growing demand for automotive steel sheets in China, the world’s top automobile producer, which manufactured 25 million vehicles, a 32% of global output, in 2020.

POSCO entered China in 1997 by setting up a stainless JV with Shagang Group. The South Korean steelmaker now produces 1 million tons of stainless a year in the mainland with a capacity expansion in 2011.

Write to Jung-hwan Hwang at jung@hankyung.com
Jongwoo Cheon edited this article.