[Click eStock] "Hyundai Steel Expected to Turn Operating Profit Negative in Q2"

[Asia Economy Reporter Park Ji-hwan] Yuanta Securities stated on the 30th that Hyundai Steel is expected to experience a prolonged slump in flat steel products in the second quarter, forecasting a consolidated operating loss of 79.1 billion KRW, turning to a deficit compared to the previous year. The investment opinion and target price were given as 'Buy' and 32,000 KRW, respectively.

Researcher Lee Hyun-soo of Yuanta Securities predicted that this year Hyundai Steel will have a year marked by contrasting performances between long products and flat steel products.

Researcher Lee Hyun-soo said, "Sales volume of long products increased compared to the previous quarter," adding, "Performance improvement is expected due to the expanded spread (product price - raw material price)." Although sales volume decreased compared to the previous year due to the impact of the novel coronavirus infection (COVID-19), seasonal peak effects and a faster-than-expected normalization of domestic construction sites drove demand.

Researcher Lee analyzed, "On the supply side, domestic rebar steelmakers made efforts to balance supply and demand by avoiding excessive production, which led to a rise in rebar prices," and "Although the price of steel scrap surged sharply after May, burdening costs, the increase in rebar prices was greater, likely improving the spread."

Regarding flat steel products, it is expected that raw material input costs will decline in the second half of the year, but due to sluggish demand recovery in downstream industries, spread expansion is anticipated to be possible from the fourth quarter.

Researcher Lee stated, "Hyundai Steel is expected to focus more on restructuring than performance improvement this year," adding, "Following the physical division of the forging division, it appears they are considering the permanent closure of the thin plate hot-rolling facility and electric furnace hot rolling at Dangjin," and "From 2021 onward, with industry recovery, the effects of restructuring are expected to appear."

This content was produced with the assistance of AI translation services.