Dongkuk buys 15% stake in Vietnamese steel fabricator

Dongkuk Steel Mill Co., South Korea’s leading color-coated steel manufacturer, said on Wednesday it has acquired a 15% stake in VSSC Steel Center LLC in Vietnam. The Korean firm didn't disclose the value of the deal.

VSSC is a steel fabricator that cuts steel coils, or finished steel sheets that have been coiled after rolling, for corporate clients' customization. Based in Phu My II Industrial Park in Southern Vietnam, the steel fabricator is near a port and just an hour by car from Ho Chi Minh City and home appliances manufacturing facilities in Saigon Hi-tech Park.

The Vietnamese firm can process and produce up to 70,000 tons of color-coated steel sheets a year. It completed construction of the plant last December and finished stabilization of the facility in the first quarter of this year. The plant will begin operations in the second quarter.

Dongkuk is exporting 10,000 tons of color steel sheets annually to Vietnam. Expecting that Southeast Asia's fastest-growing economy will increasingly consume high-end construction materials, Dongkuk is aiming to boost sales of its premium color-coated steel brand Luxteel, in Vietnam.

The Korean steelmaker is planning to use the acquisition as a stepping stone for its global expansion. Last November, Dongkuk announced its plans to increase its overseas facilities to up to eight factories and sales offices in seven countries by 2030 from the current three plants -- one each in Mexico, India and Thailand.

In January of this year, the Korean steelmaker said it is building a second steel coil plant in Mexico with a 14 billion won ($11.1 million) investment and will begin operations as early as October. Based in the state of Querétaro, the plant will have an annual production capacity of 70,000 tons of color-coated steel sheets.

Its main plant in Busan has a color steel producing facility with an annual production capacity of 850,000 tons, the world’s largest capacity for a single plant. The Korean steelmaker aims to ramp up its color-coated steel business to 2 trillion won in revenue with an annual manufacturing capacity of 1 million tons by 2030.

Dongkuk's share in the Korean color steel sheet market plunged from 30% in 2020 to 24% last year. POSCO Steeleon Co. topped the domestic market share last year, scoring 27%. It was the first time that Dongkuk has skidded from the top in the Korean color steel sheet market.

(Updated with market share)

Write to Kyung-Min Kang at kkm126@hankyung.com
Jihyun Kim edited this article.