The United States government has launched an additional investigation into Hyundai Steel’s cold-rolled steel sheets, taking issue with South Korea’s Special Act on Corporate Revitalization. This investigation is the third of its kind since the beginning of this year, following those related to hot-rolled and plated steel sheets. Hyundai Steel's other products exported to the US could also be brought under investigation.
Nucor, an American steel company, recently claimed that Hyundai Steel received tax incentives and R&D assistance from the South Korean government in accordance with the act in exporting cold-rolled steel sheets, asserting that the incentives and assistance are equivalent to government subsidies. The US Department of Commerce initiated the additional investigation, saying Nucor’s claims are well-grounded.
The targets of the investigation are Hyundai Steel products exported to the United States in 2016. The Special Act on Corporate Revitalization was passed in February 2016 to ease regulations on companies working on new business or business restructuring. As such, other products of the steel company could become targets as well.
During its anti-dumping probe into steel pipes back in 2015, the department reached a conclusion that South Korean companies did not use cheap electricity. However, the department retracted what it said during this year’s anti-dumping investigation on steel pipes. The department is currently looking into the possibility that Korea Electric Power Corporation provided subsidies for steel companies by marking down the price of electricity.
The department’s final conclusion is likely to affect Hyundai Motor Group and Kia Motors in the U.S. as well. At present, Hyundai Steel is supplying plated steel sheets manufactured in South Korea to the automakers’ manufacturing facilities in Alabama and Georgia. Their cost burden cannot but increase once a high tariff is imposed on the plated steel sheets.