[Special Stock] POSCO and Hyundai Steel Fall 5%... "Was the Expectation for China's Production Cuts Too High?"

[Asia Economy Reporter Minji Lee] POSCO and Hyundai Steel have been declining for two consecutive trading days.

As of 10:34 AM on the 3rd, POSCO is down 5.4% at 340,500 KRW. Hyundai Steel also traded at 50,900 KRW, down 4.8% from the previous trading day. In addition, SeAH Besteel (-4.1%), Bukuk Steel (-5.1%), Dongkuk Steel (-2.6%), Korea Steel (-2.6%), and POSCO Coated & Color Steel (-2.6%) are also showing downward trends. The steel and metal sector index fell about 3.52%, marking the largest decline among the KOSPI market sectors. Global steel stocks also widened their losses. Baoshan Iron & Steel fell about 8.3% since the 30th of last month, and ArcelorMittal closed down by around 3%.

The increased decline in the steel sector reflects disappointment that the Chinese government's production cut intensity may be lower than expected. Last week, expectations rose that domestic steel companies' export competitiveness would improve due to China's steel production cuts and the possible imposition of steel export taxes. However, as forecasts emerged that the production cut volume might be reduced compared to expectations, more investors appeared to be selling.

Minjin Bang, a researcher at Eugene Investment & Securities, explained, "Over the past weekend, some local governments mentioned that aggressively pushing carbon reduction plans could affect normal economic activities. To maintain last year's crude steel production levels, a production cut of over 50 million tons in the second half of the year was necessary, but the scale of cuts is likely to be reduced." He added, "The market reaction seems excessive, but since expectations were high, it appears that a flood of disappointment selling is occurring."