South Korea's Steel Tire Cord Squeeze: Inside the Bain Capital–Hyosung Deal

South Korea's Tire Cord Industry Faces a Private Equity Reckoning

Tire cord rarely gets the attention that natural or synthetic rubber does, yet it is the third most expensive material in a tire, accounting for about 24 percent of manufacturing cost, just behind natural rubber at 27 percent and synthetic rubber at 26 percent. South Korea supplies an outsized share of the world's tire cord, both the polyester and nylon fiber cords used in passenger and SUV tires and the steel cord used across the industry, through two companies, Hyosung Advanced Materials and Kolon Industries. In 2025 that industry hit two milestones at once: plant utilization at the country's cord makers pushed toward capacity, and Hyosung agreed to sell its steel cord division, the unit generating an estimated 40 percent of its parent's profit, to Bain Capital in a deal worth roughly 1.5 trillion won, or about 1.1 billion dollars.

Figure 1. Tire Manufacturing Cost Breakdown by Material

A Supply Squeeze Built on China and India Demand

Hyosung and Kolon's polyethylene terephthalate, or PET, tire cord plants were running at close to 100 percent utilization in 2024, up from about 80 percent the year before, according to petrochemical material industry sources cited by Korea Economic Daily's KED Global. The tightness traces back to tire demand growth in China and India. China's passenger car tire plant utilization topped 80 percent in 2024, the highest level since 2014, helped by rising electric vehicle output and a 20 percent year-on-year jump in Chinese tire exports to the United States and Europe. India, now the world's third-largest car market behind China and the United States, has added further pull on cord supply, prompting Hyosung to announce plans in early 2024 to add a tire cord production base in the country.

Figure 2. Hyosung and Kolon PET Tire Cord Plant Utilization, South Korea

SUVs and large sedans compound the effect, since they use an average of 1.5 times more PET tire cord than smaller vehicles, and the global vehicle mix has continued shifting toward that segment. On the supply side, relief is not coming quickly. Kordsa, the Turkish producer that ranks fourth globally in PET tire cord, is the only major player currently adding capacity, and its planned 7,000 tonne expansion equals roughly 1 percent of global PET tire cord output. Hana Securities analyst Yoon Jae-sung noted that because ramping up production capacity takes at least two years, tight PET tire cord supply is likely to persist for the next two to three years even if electric vehicle demand growth slows, since SUV demand is expected to keep climbing.

Two Companies, One Rare Capability Set

Hyosung Advanced Materials is the only company in the world that manufactures all three major tire reinforcement materials at scale: steel cord, nylon tire cord, and PET tire cord. Its steel cord franchise, built through the 2005 acquisition of a Michelin plant in the United States and two Goodyear plants acquired in 2011, ranks first in North America and Europe and second globally. Kolon Industries, the country's other major cord producer, has been deliberately reallocating capital toward tire cord and away from lower-margin lines, downsizing its industrial film business in 2023 in the face of Chinese competition while expanding its PET tire cord fabric plant in Vietnam. Hyosung made a similar bet on Vietnam earlier, investing 191 million dollars in 2022 to expand tire cord production lines there.

That capital reallocation has not been painless. Hyosung Advanced Materials reported consolidated operating profit of 172.4 billion won for 2023, down 45 percent year on year, on revenue of 3.20 trillion won, down 17 percent, as competition from Chinese producers weighed on its industrial film business specifically. Net profit fell 70 percent to 47.3 billion won over the same period. South Korea's two major credit rating agencies, Korea Investors Service and NICE Investors Service, subsequently lowered the company's ratings outlook by one notch, a setback to what had been an expected upgrade.

Figure 3. Hyosung Advanced Materials: Operating Profit, FY2022 vs FY2023

Why Bain Capital Is Buying the Steel Cord Business

Against that backdrop of group-wide profit pressure, Hyosung's steel cord division stands out. The unit generated an estimated 900 billion won in revenue and 150 billion won in EBITDA in its most recent full year, and it is estimated to contribute about 40 percent of Hyosung Advanced Materials' total profit, a disproportionate share for a business Hyosung has decided is no longer core. HS Hyosung opened the sale process in February 2025, and after domestic private equity firms JKL Partners and STIC Investments were initially seen as the leading candidates, Bain Capital emerged as the preferred bidder in July, beating the local contenders in what would be one of the largest recent industrial carve-outs in South Korea by a foreign private equity firm. Hyosung's own valuation expectations had started closer to 2 trillion won before settling nearer the 1.5 trillion won range reflected in the deal, a downward adjustment the company's advisors attributed to more conservative private equity pricing conditions generally.

Figure 4. Hyosung's Steel Cord Business: Revenue and EBITDA, Most Recent Year

Table 1. The Bain Capital and Hyosung Steel Cord Deal at a Glance. Source: KED Global (Korea Economic Daily), reporting dated July 29, 2025.

What This Means for Tire Makers and Investors

For tire manufacturers that buy steel cord from Hyosung, ownership passing from a diversified industrial conglomerate to a private equity sponsor is worth watching closely. Bain Capital's stated rationale, a mid-market industrial carve-out with strong standalone cash generation, typically comes with an investment horizon of three to seven years and a focus on operational efficiency and eventual resale or public listing, a different strategic posture than a conglomerate unit whose capital allocation competes internally with electric vehicle materials, hydrogen, and artificial intelligence investments. Tire makers with multi-year steel cord supply agreements tied to the current entity should expect the counterparty's investment priorities, and potentially its capital expenditure plans for new capacity, to shift once the sale closes.

On the fiber cord side, the supply and demand picture is more straightforward: utilization at the country's two dominant PET tire cord producers is already near its ceiling, the only meaningful capacity addition in the pipeline covers roughly 1 percent of global output, and the underlying demand drivers, EV growth in China, a fast-expanding Indian car market, and a continuing shift toward SUVs, show no sign of reversing. Buyers who have not locked in multi-year cord supply agreements at fixed terms are exposed to a seller's market that, on the industry's own estimates, has at least two more years to run.