Hyundai Steel's low-carbon bet backfires as scrap costs surge and construction slump hits profits

Hyundai Steel, South Korea's largest electric arc furnace steelmaker, is facing a severe financial squeeze after betting early on low-carbon steel production. The company's EAF model, designed to reduce emissions versus traditional blast furnaces, has backfired as global demand for scrap metal pushes raw material costs higher. At the same time, a prolonged construction downturn in Korea has erased 90% of operating profit, and the interest coverage ratio has fallen to 0.6x, signaling weak financial health. The company is now selling off marginal assets and idling plants in Ulsan and Dangjin while pursuing an $8.5 billion US steel mill investment to refocus on North American mobility and high-value products. The case illustrates a broader risk in industrial decarbonization: first-mover advantage in low-carbon processes can be undercut by commodity price shifts and demand cycles. For anyone tracking industrial emissions policy or green steel economics, this is a real-world stress test of the EAF model outside China.