Hyundai Motor Group Chairman Chung Eui-sun recently announced plans to invest $21 billion in the United States over the next four years, including a new $5.8 billion steel mill in Louisiana. The move is seen as a strategic effort to strengthen ties with the Trump administration and reap the benefits of sourcing steel locally, where industrial electricity rates are significantly lower than in South Korea.
Hyundai Steel, Hyundai Motor Group’s steel-making subsidiary, plans to build an ultra-low carbon steel manufacturing facility in Ascension Parish, Louisiana. The plant, the company’s first steel mill in the U.S., is expected to produce 2.7 million metric tons of steel annually. “The new steel mill will allow us to source high-quality steel plates locally and better respond to uncertainties such as tariffs,” the company said.
Experts say Hyundai’s decision to build the plant in the U.S. was also influenced by cheaper electricity prices for industrial use in the U.S. than in Korea. The group needs to produce high-quality automotive steel to stay competitive in the global automotive market, which has been challenging and costly because Korea’s industrial electricity rates have continued to rise.
Hyundai Motor and Kia have been increasing the use of ultra-high-strength steel (UHSS) in their vehicles. UHSS offers greater crash resistance, higher tensile strength, and superior formability compared to conventional automotive steel. Hyundai Steel, which produces this type of steel in electric arc furnaces, is one of the largest electricity consumers in Korea.
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.
“Korea’s current industrial electricity rates are unsustainable for energy-intensive companies,” said Kwon Hyo-jae, CEO of COR Energy Insight. “Hyundai Motor Group’s $21 billion investment in the U.S. is partly a response to trade pressures but also reflects the growing burden of Korea’s high industrial electricity prices. Korea needs to take a hard look at how its energy pricing affects global competitiveness.”
