Steel Stocks Rally Continues

Rising Raw Material Prices and Continued Demand Growth Trends

[Image source=Yonhap News]

[Asia Economy Reporter Park Jihwan] Attention is focused on whether the steel stocks, which have raised performance expectations through aggressive price increase policies recently, will continue their upward trend as their stock prices show strength.

According to the Korea Exchange on the 16th, POSCO's stock price rose 25.5% from February this year to the day before. Hyundai Steel also increased by 13.1% during the same period. This significantly outperforms the KOSPI increase rate of 2.3%.

The recent strength in steel companies' stock prices is due to companies aggressively raising prices as global steel prices surged. As of early this month, the U.S. hot-rolled coil price was $1,200 per ton, a 61% increase compared to the average in the fourth quarter of last year. The European Union (EU) also saw a 39% rise. With raw material prices soaring, POSCO raised hot-rolled coil prices by 80,000 KRW in January, 100,000 KRW in February, and another 50,000 KRW in March. The cumulative increase in the first quarter alone was 230,000 KRW.

The market expects the price rise of raw materials for the steel industry, such as iron ore and copper, along with crude oil, to continue this year. Along with this, steel demand is expected to keep increasing due to economic stimulus measures by various countries. These steelmakers are anticipated to maintain their performance improvement by passing on the rising raw material costs to product prices. Kim Hyuntae, a researcher at BNK Investment & Securities, said, "Currently, the domestic steel industry is supported by both domestic and international demand, so the increase in raw material prices is being smoothly passed on to product prices," adding, "The performance momentum of major steelmakers is expected to continue until the first half of the year."

Supported by sustained demand and the effect of price increases, performance expectations for POSCO and Hyundai Steel are also expanding. According to financial information provider FnGuide, POSCO's operating profit consensus for this year, based on the recent one-month period, is forecasted at 4.7353 trillion KRW, which is 97.1% higher than last year's 2.403 trillion KRW. Hyundai Steel's annual operating profit is also estimated to increase by 968.9% to 780.3 billion KRW from last year's 73 billion KRW. This reflects upward revisions of 7.5% and 13.7%, respectively, compared to the operating profit forecasts of 4.4046 trillion KRW and 686.5 billion KRW three months ago for POSCO and Hyundai Steel.

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