[Click eStock] "Hyundai Steel, Steel Demand Deterioration and Currency Risk... Target Price Down 20%"

On the 30th, NH Investment & Securities lowered the target price of Hyundai Steel from 40,000 KRW to 32,000 KRW, a 20% decrease. This was due to slow profitability recovery caused by a sharp rise in exchange rates and deteriorating steel demand. The investment opinion 'Buy' was maintained.

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According to NH Investment & Securities, the steel industry is currently experiencing continued sluggish market conditions, and concerns over deteriorating steel demand due to the recent sharp rise in exchange rates and Trump's tariff war are expected to result in a lower-than-anticipated profitability recovery. External factors such as domestic political uncertainty and the sharp rise in the KRW-USD exchange rate are adding additional burdens.

Nevertheless, steel demand is expected to improve in the future due to China's economic stimulus measures. If China's steel demand recovers, it will lead to a reduction in China's steel exports, which is likely to be a major factor driving steel price increases. However, strong signs of recovery in China's steel demand have not yet appeared, although the fact that China's real estate sales area in November increased by 3.2% year-on-year for the first time since June 2021 can be seen as a positive signal.

Additionally, the increase in domestic building construction area can serve as an important indicator as it may lead to increased demand for long products. Although domestic demand for rebar and H-beams decreased by about 20% until October, major steelmakers are compensating for this by reducing production. Researchers Jaegwang Lee and Seungyoung Lee of NH Investment & Securities stated, "In particular, the domestic building construction area increased by 12.3% year-on-year until October, marking the first increase this year," adding, "This is expected to have a positive impact on domestic steel demand."

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