[Click eStock] “Hyundai Steel, Mixed Feelings of Disappointment and Expectation”

Yuanta Securities "Hyundai Steel Target Price Raised from 63,000 KRW to 73,000 KRW"
Considering Expected Increase in Overseas Supply, Hot-Dip Galvanized Steel Price Expected to Exceed 80,000 KRW per Ton

[Asia Economy Reporter Gong Byung-sun] Hyundai Steel's price negotiations for automotive steel sheets conducted with Hyundai Motor and Kia have been analyzed as somewhat disappointing. However, considering the expected price increase for overseas supply, profitability recovery is also predicted. Yuanta Securities has raised the target price for Hyundai Steel from the previous 63,000 KRW to 73,000 KRW, maintaining a 'Buy' investment rating.

According to Yuanta Securities on the 11th, Hyundai Steel reportedly concluded negotiations with Hyundai Motor and Kia at the end of last month to raise the domestic supply price of automotive steel sheets by 50,000 KRW per ton. This marks the first increase in four years. When comparing iron ore and coking coal prices to those four years ago, the weighted average cost increase per ton of production is estimated to exceed 50,000 KRW per ton. Researcher Lee Hyun-soo of Yuanta Securities stated, "It is true that the result of the automotive steel sheet price negotiations is somewhat disappointing."

However, considering the expected price increase for overseas supply, the overall price increase level for automotive steel sheets is estimated to exceed the 80,000 KRW per ton predicted by Yuanta Securities. Lee explained, "The spread improvement for hot-rolled, cold-rolled, and thick plates will continue into the second quarter," adding, "Although the spread improvement in the distribution market for long products (rebar) is not immediately applied due to the pricing structure, it is only a matter of time before it happens."

Special steel is also expected to recover profitability through price increases. Due to a human accident last month, the Dangjin No. 1 hot rolling mill has been halted for over a month, affecting some production. On the 8th of last month, a worker at the Dangjin Steelworks was caught in machinery and died. While this may increase cost burdens, the spread improvement effect observed across all product categories is estimated to be greater.