Starting a second blast furnace, expanding capacity around 25%, and planning a third furnace, Hyundai Steel Co. is South Korea's second-biggest steelmaker.

According to Businessweek, the newest furnace is in Dangjin, which can produce 4 million tons of crude steel a year, increased Hyundai's annual capacity to 20 million metric tons.

Hyundai used electric arc furnaces up until January when they opened their first blast furnace.

The article states that, "Hyundai Steel, a unit of the Hyundai Motor Group, has gained 27 percent this year on expectations that the expansion will boost profit, outperforming a 27 percent decline in bigger rival Posco. Hyundai’s two furnaces, costing 6.23 trillion won ($5.4 billion), may replace imported steel and eat into Posco’s share, especially, in the automotive steel market

“The new furnace will help reduce production costs and increase overall output,” Shin Yoon Shik, an analyst with Meritz Securities Co. in Seoul, said before the furnace opening. “We expect Hyundai’s operating profit to increase next year on the new furnaces.”

Hyundai Steel, the nation’s biggest maker of construction steel, reported third-quarter profit of 260.8 billion won last month, beating analyst estimates as increased sales of flat products offset a slump in construction steel.

The two new furnaces have a combined capacity of 8 million tons per year. Hyundai produced 9.9 million tons of steel last year, according to the company’s website.

“Now that we have completed the second furnace, we will prepare for a third furnace,” President Woo said. “We’ll proceed with it depending on market conditions.” The company is seeking regulatory permission for the third one, he said.

Flat products such as plate, hot rolled, cold rolled and galvanized, used mostly to make autos and ships, will account for 63 percent of the company’s production by 2015 on assumption that a third furnace is completed by then, up from 26 percent in 2008, Hyundai said today. Long products, or construction steel, comprise the rest of its output.

Posco, the world’s third-biggest steelmaker by output, was the only South Korean mill to make crude steel from blast furnaces, which use iron ore and coal, before Hyundai’s plants started up."

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