Hyundai Steel to sell two Chinese plants amid sluggish sales

Hyundai Steel CEO An Tong-il presents the company's "Carbon Neutrality Roadmap" in a video uploaded in April. [HYUNDAI STEEL]

Hyundai Steel is selling off its two Chinese automotive steel plate facilities amid slumping sales in China for both Hyundai Motor and Kia.

Hyundai Steel "categorized Hyundai Steel Beijing Process and Hyundai Steel Chongqing as assets held for sale as it signed a memorandum of understanding with a potential buyer," according to its regulatory filing.

The value of the two Chinese plants is estimated to be 82.5 billion won ($61.7 million), the company said.

Hyundai Steel Beijing Process, built in 2002, and Hyundai Steel Chongqing, built in 2015, both process the automotive steel plates supplied to Hyundai Motor and Kia factories in China.

Details about the potential buyer and the deal size have not been confirmed.

First entering the Chinese market in 2002, Hyundai Motor and Kia's sales in the country, alongside those for a wide range of Korean products, have been on the decline since the late 2010s due to tensions over the deployment of the Terminal High Altitude Area Defense system, or Thaad.

Sales of Beijing Hyundai Motor plunged 75.7 percent last year compared to 2016, while sales of Kia in China fell 80.8 percent during the same period.

"The majority of the products were supplied to Hyundai Motor and Kia, but we decided to liquidate them due to the automakers' sluggish sales in China," a spokesperson for Hyundai Steel said.

Meanwhile, Hyundai Steel is building a new automotive steel plate facility in Georgia for Hyundai's new $5.5 billion electric vehicle-dedicated factory that will begin operation in 2025.

The Korean steelmaker is investing 103.1 billion won in the new facility, which will be completed in the second quarter of 2024.

BY SARAH CHEA [chea.sarah@joongang.co.kr]