[Click eStock] "Nexen Tire, Struggling with US Anti-Dumping Measures Amid Capacity Utilization Recovery"

[Asia Economy Reporter Eunmo Koo] IBK Investment & Securities evaluated Nexen Tire as carefully considering anti-dumping measures in the U.S. amid a recovery in operating rates. The investment opinion was maintained as 'Buy,' but the target price was lowered from the previous 9,800 KRW to 7,000 KRW.

Nexen Tire is expected to escape the worst situation as operating rates rise in the third quarter. In a report on the 21st, analyst Sanghyun Lee of IBK Investment & Securities estimated that Nexen Tire's third-quarter sales would decrease by 14.2% year-on-year to 459.1 billion KRW, and operating profit would drop by 47.2% to 29.5 billion KRW. The analyst explained, "Although performance is still down compared to the same period last year, the company will escape the worst second-quarter situation, which recorded a deficit due to low operating rates caused by COVID-19, initial burdens from the Czech plant's startup, and shutdowns. This is because, in the third quarter, there are no domestic or overseas production stoppages, export shipments are recovering, and lower input costs are expected to be reflected."

In May, a petition for an anti-dumping investigation was filed in the U.S. against imported passenger tires from Korea, Taiwan, Thailand, and Vietnam. A preliminary ruling is expected in the fourth quarter, with the final ruling scheduled around the second quarter of next year. The analyst assessed, "Since only Korea among the four countries under investigation saw a decrease in tire imports into the U.S. last year, there is a forecast that other Southeast Asian countries will be the actual targets. However, once tariffs are imposed, rates typically range from 40% to 200%, so preparation is necessary."

He added, "Since Nexen Tire does not have a local plant in the U.S., it is securing sufficient inventory in advance in the short term to prepare for the possibility of anti-dumping tariffs, and in the mid to long term, it is considering a second phase expansion of the Czech plant or establishing a new U.S. plant. Based on 2019 sales, Nexen Tire's North American market share accounts for 29.5%, and the proportion of high-inch tires of 17 inches or more is also high at the 70% level, so future responses in the U.S. market appear to be important."