NICE IS: "Korean Secondary Batteries Unlikely to See Rapid Performance Improvement Despite Favorable Trade Environment"

NICE Investors Service (NICE IS) has projected that, despite a more favorable trade environment for the secondary battery industry, immediate improvement in performance will remain difficult.

Shin Hoyong, a senior researcher at NICE IS, explained at the 'NICE Credit Seminar 2025' held at the Korea Exchange on September 17 that, "Korean companies have strengths in their diversified overseas production bases, but since their portfolios are focused on medium- and large-sized EVs, there will be only limited improvement in operating rates."

NICE IS assessed that, although the secondary battery industry has experienced a slowdown due to oversupply from China, major importing countries are responding with high tariffs, which is creating opportunities for Korea. Researcher Shin noted, "The United States and Europe are moving to separate their supply chains from China through high tariffs," and predicted, "In this process, Korean companies will benefit by replacing Chinese products."

He added, "Korean companies have proactively secured production bases in North America and Europe, increasing regional diversification," and evaluated that, "They have established stable order bases by making facility investments in the form of joint ventures with global automakers."

However, he anticipated that immediate improvement in profitability would be difficult. He said, "While the favorable changes in the trade environment will provide a foundation for Korean companies to compete with Chinese firms, immediate improvement in profitability is unlikely."

NICE IS explained that portfolio diversification is necessary for Korean companies to improve profitability. He stated, "The eco-friendly vehicle market is being driven by the growth of the small EV segment," and predicted, "Since Korean companies have portfolios focused on medium- and large-sized vehicles, there will be only limited improvement in battery operating rates." He added, "In order to stabilize profit generation, it will be necessary to develop low-cost solutions that can compete with Chinese companies and to diversify the types of vehicles supplied."

He also predicted that, if profitability does not improve, there will be downward pressure on credit ratings. He emphasized, "Secondary battery companies affiliated with large conglomerates have defended their credit ratings by raising capital through equity financing, but if they fail to alleviate the increased debt burden through improved profit generation, there is a possibility that their credit ratings will decline."

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