Published by: Norman Fong<>, Tina Tong<>, Paul Lim<>, Bella Cheng<>, Carman Chew<>, Jessie Li<>
27 Mar 2025 @ 10:26 UTC

Japanese and South Korean steelmakers are facing increased pressure after the US added to the list of automotive tariffs that are expected to come into force on April 2, further exacerbating bearish market sentiment, sources told Fastmarkets by Thursday March 27.
Early on Thursday morning Asia time, US president Donald Trump signed an executive order imposing 25% tariffs on all imported automobiles from April 2 – the latest addition to the tariffs on steel and aluminium that were introduced on March 12.
Japan Automotive exports in Japan reached 3.82 million units in the first 11 months of 2024 and while this was a 4.3% year-on-year decline, Japan is still the world’s second-largest car exporter in the world, after China.
Steel mills in Japan are operating at about 45-50% capacity at the moment, a Japanese trading source said.
Japan has seen a sharp decline in crude steel production since the start of the year. Production volumes fell 8.5% year on year to 6.4 million tonnes in February, according to the latest World Steel Association figures published on Tuesday.
A trader based in East Asia told Fastmarkets the car manufacturing sector in Japan has been struggling against stiff competition from China’s increase in production in addition to Japan’s uneven transition to embracing electric vehicle (EV) production.
The trader added that an additional tariff on car exports will significantly undercut the profit margins of car manufacturers, forcing producers to seek drastic solutions to reduce operating costs amid falling revenues.
South Korea The impact of the impending US auto tariffs is also expected to heavily on the South Korean steel market, sources told Fastmarkets.
The US is currently the largest export market for South Korea, with roughly 49.1% of Korean automotives destined for the US, according to the latest data from the Korea Auto Industries Cooperation Association (KAICA).
Since March 18, government officials have been soliciting comments from the country’s auto sector to formulate a rescue plan.
And on March 24, Hyundai Motor Group announced plans to invest $5.8 billion in a new steel manufacturing facility in the southeastern US state of Louisiana to supply its auto plants in the nearby states of Alabama and Georgia.
But this project will take about four years to set up, so it is not going to help demand for South Korean HRC in the near- and mid-term, a South Korean steel industry seller source told Fastmarkets.
The source said the domestic steel market in South Korea were still strong and that anti-dumping measures being initiated against Japanese and Chinese hot rolled coil, as well as Chinese steel plate, would help to bolster the domestic market.
The impact on flat steel bound for automotive production will be severe, the source added.
South Korean crude steel production edged up by 0.7% year on year to 5.2 million tonnes in February, but still recorded a 2.8% year-on-year drop in production volumes for the first two months of the year, according to World Steel Association data.
China China exported 4.8 million cars in 2024, up by 25% from the previous year, placing it ahead of Japan as the world’s largest auto exporter for the second year in a row according to data from the China Passenger Car Association (CPCA).
Electric cars and plug-in hybrids, collectively known as new energy vehicles (NEVs) accounted for 1.29 million units, up by 24.3% from the previous year, in line with extensive ramp ups by Chinese producers.
The US is not a major buyer of Chinese automobiles, so the tariffs have not significantly hurt exports of Chinese automobiles.
But upstream automotive products – such as hot-rolled coil, cold-rolled coil, galvanized steel and electrical steel – have been negatively affected by the US tariffs, sources said. This is because these steel products are exported to Mexico, where automobiles are manufactured before being exported to the US.
A trader based in Shanghai told Fastmarkets that an additional tariff on Chinese automotive exports was expected to limit the expansion efforts of the NEV industry.
In a period where manufacturing demand has been one of the only bright spots in the downstream steel market, given the persistent weakness in the property and construction sectors, a tariff on automotive equipment could weigh on production volumes and demand for flat steel, a trader from Beijing said.
The dip in construction-related demand for steel was readily displaced by the growth in flat steel demand from the electric car sector and some mills have even made shifts in their production schedules to produce more flat steel than long steel.
Jessica Zong based in Shanghai office contributed to the article.