Recently, Hyundai Motor Group Chairperson Chung Eui-sun disclosed intentions to commit an investment of $21 billion in the U.S. within the coming four-year period. This includes establishing a substantial new facility—a $5.8 billion steel plant—in Louisiana. This initiative is perceived as a calculated step aimed at bolstering relationships with the Trump administration and capitalizing on local steel production advantages, particularly due to cheaper industrial power costs compared to those in South Korea.
Hyundai Steel, which is part of the Hyundai Motor Group, intends to construct an ultra-low carbon steel production site in Ascension Parish, Louisiana. This facility will be the group’s inaugural steel mill in the United States and is projected to yield approximately 2.7 million metric tons of steel each year. According to the company, “This new steel mill will enable us to obtain premium quality steel plates domestically and enhance our capacity to address issues like tariffs.”
Experts suggest that Hyundai’s choice to construct the facility in the United States was swayed by lower industrial electricity costs stateside compared to those in South Korea. To remain competitive globally within the car industry—which remains tough and expensive due to escalating industrial power rates in Korea—the team must manufacture top-notch automotive steel.
Both Hyundai Motor and Kia have been enhancing the application of ultra-high-strength steel (UHSS) in their automobiles. This material provides enhanced crash protection, increased tensile strength, and better shaping capabilities than traditional car steel. As Hyundai Steel manufactures this particular grade of steel using electric arc furnaces, it stands as one of South Korea’s biggest power consumers.
According to the state-run Korea Electric Power Corp. (KEPCO), Korea’s average industrial electricity rate stood at $95.3 per megawatt-hour (MWh) in 2022, more than 10% higher than the U.S. average of $84.5 per MWh.
The U.S. ranks among the lowest industrial electricity rates among OECD countries. Based on KEPCO data comparing 38 OECD member countries, with the average index set at 100, the U.S. scored 58—the lowest among the countries surveyed, excluding Australia and Iceland, which were not included in the ranking.
Electricity in the U.S. is usually generated through LNG power plants. Louisiana, where Hyundai’s new steel mill will be located, is rich in natural gas and known for its low electricity rates.
Current industrial electricity rates in South Korea are not viable for businesses with high energy consumption,” stated Kwon Hyo-jae, CEO of COR Energy Insight. “The Hyundai Motor Group’s $21 billion investment in the United States can be attributed partially to trade tensions but also highlights the increasing strain caused by South Korea’s elevated industrial power costs. The country must carefully assess how its energy pricing impacts international competitiveness.
