Expectations for Business Recovery... Hyundai Steel Soars 30% in Ten Days

[Asia Economy Reporter Koh Hyung-kwang] Hyundai Steel's stock price has shown a strong rebound, rising nearly 30% since the beginning of this month. This is interpreted as reflecting expectations that domestic and international steel demand will recover next year.

According to the Korea Exchange on the 11th, Hyundai Steel was trading at 41,200 KRW on the KOSPI market as of 9:30 AM, up 1.4% from the previous trading day. It reached a 52-week high, showing an upward trend for eight consecutive days this month except for a 1.9% drop on the 8th. The increase rate during this period reached 29.5%. Compared to the stock price on March 23, when it hit its yearly low (12,400 KRW), the closing price on the previous day was 3.2 times higher.

The outlook that steel demand will rebound next year is said to have influenced the stock price. The World Steel Association (WSA) forecasted that global steel demand will increase by 4.0% to 1.795 billion tons next year, compared to 1.725 billion tons this year. Steel prices in China are also strong. The strong steel prices in China are positive for domestic blast furnace operators Hyundai Steel and POSCO. Kim Yoo-hyuk, a researcher at Hanwha Investment & Securities, predicted, "The strong steel prices in China will continue for the time being."

Although Hyundai Steel's stock price is only half of what it was in 2018 before the spread of COVID-19, it continues to show strength amid expectations of vaccine development and economic recovery, which are expected to restore domestic and international steel demand. The steel industry, influenced by demand industries such as shipbuilding, automobiles, and construction, is a representative cyclical sector that is highly affected by economic cycles.

The future earnings outlook is also positive. Operating profit is expected to turn positive in the fourth quarter, and net profit is forecasted to return to black next year. Bang Min-jin, a researcher at Eugene Investment & Securities, said, "Hyundai Steel is expected to record consolidated sales of 4.781 trillion KRW and an operating profit of 94.7 billion KRW in the fourth quarter," adding, "Sales will increase by 0.8% year-on-year, operating profit will turn positive, and compared to the previous third quarter, sales will increase by 7.8% and operating profit by 183.9%."

Next year, profit improvement is expected to be more pronounced, centered on the expansion of automotive steel sheet sales. Byun Jong-man, a researcher at NH Investment & Securities, said, "Hyundai Steel's operating profit next year is estimated to surge fourfold year-on-year to 452.8 billion KRW," adding, "Net profit is expected to turn positive during the same period, and sales are forecasted to reach 18.6167 trillion KRW, a 5% increase compared to the same period last year."

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