Yulchon gears up for seamless tube mass production at Hwaseong factory

Hwaseong factory built with 13.7 billion won investment to produce seamless steel tubes

Company targets 7,700 tons of seamless tube output next year

Poland entry follows Mexico push; break-even targeted for 2028

Yulchon, a Kosdaq-listed precision steel tube manufacturer, completed its Hwaseong factory this month. [Hwaseong, Gyeonggi Province = Kim Yu-jin]

Yulchon, a Kosdaq-listed precision steel tube manufacturer, is pushing into global markets through seamless tube mass production and the establishment of a European manufacturing base. The company plans to layer production and sales from its newly completed Hwaseong factory and an upcoming Poland facility on top of its existing precision cold-drawn steel tube business for automobiles, with full earnings contributions expected from 2027.

Yulchon showcased its new production equipment and business strategy at its Hwaseong factory in Gyeonggi Province on Tuesday. The factory is a seamless tube manufacturing facility the company built with a total investment of 13.7 billion won ($10.3 million), capable of producing up to 18,000 tons annually.

Founded in 1986 and listed on the Kosdaq market in 2023, Yulchon specializes in precision steel tube manufacturing. Drawing on technology that precisely shapes metal rods and tubes through dies to achieve target diameters and wall thicknesses, the company produces steel tubes used in shock absorbers, suspension systems and steering components for automobiles. It has expanded its business by building supply chains with global automakers including Nissan, Toyota and Honda.

A seamless steel tube production line in operation at Yulchon's newly completed Hwaseong factory. [Hwaseong, Gyeonggi Province = Kim Yu-jin]

The seamless tubes produced at the Hwaseong factory are manufactured as a single continuous pipe with no welded seams, making them suitable for applications requiring high strength and pressure resistance. Yulchon plans to secure profitability by producing in-house the seamless tubes it had previously sourced through imports. The company aims to begin with 7,700 tons of output in 2027 and scale up to 15,500 tons annually by 2031.

Yulchon expects seamless tubes to begin contributing to earnings in early 2027, with mass production starting in November. Beyond automotive parts, the company aims to expand into industrial machinery, mining equipment and chemical plants to increase the share of high-value-added products. It is also pursuing a production system in which seamless material made at the Hwaseong factory is drawn and processed at its domestic Siheung factory and at its Mexico and Poland operations.

The Mexico production base, which underpins the company's overseas growth, has been on an upward trajectory. Yulchon established its Mexican subsidiary in 2014 and completed a local factory in 2016, building a production system covering both steel tube manufacturing and drawing. As the company developed its local production capabilities to serve the North American automotive supply chain, consolidated sales grew roughly 2.8 times — from 28.6 billion won in 2020 to 79.3 billion won in 2025. Sales from the Mexican subsidiary alone rose from 200 million won in 2016 to 51.3 billion won in 2025.

The company also pointed to its Poland factory as a growth driver for the European market. Yulchon plans to complete equipment setup at the Polish facility in December and begin mass production in January. The company has set a target of recognizing revenue from 2027 and reaching break-even in 2028. It aims to build total annual production capacity of 40,000 tons — 24,000 tons of tube forming and 16,000 tons of drawing.

Yulchon's strategy is to apply the manufacturing experience accumulated in Mexico to the Poland factory and secure customers in major European markets including Germany, France and Italy. By linking its domestic, Mexican and Polish operations into a single production network, the company aims to extend its overseas business — previously centered on North America — into Europe.

Share price recovery remains a challenge. Yulchon closed at 994 won on Wednesday, finishing below 1,000 won on eight of the past 10 trading days. The company entered into a 500 million won treasury share acquisition trust agreement in July and completed the buyback in August, and is now considering additional purchases.

"Starting from the Hwaseong factory's in-house manufacturing capabilities, we plan to link our Korea-Mexico-Poland production network, expand the supply of high-value-added products and secure new overseas orders to strengthen our foundation as a global steel tube specialist," Chief Executive Lee Heung-hae said.

kacew@heraldcorp.com