[Click eStock] "Hyundai Steel: China’s Production Cut Momentum Remains Valid in Second Half"

On July 25, Meritz Securities analyzed that Hyundai Steel should be watched in 2026, as significant performance improvement is expected, driven by the imposition of anti-dumping duties and China's production cut policies.

In the second quarter of this year, Hyundai Steel posted a consolidated operating profit of 101.8 billion KRW, turning to profit and exceeding market expectations. However, its separate operating profit recorded a loss of 7.5 billion KRW, falling somewhat short of market expectations.

Sales volumes recovered from the previous quarter’s strike impact, remaining solid at 3.11 million tons for sheet products and 1.42 million tons for long products. However, the spread for long products fell by 29,000 KRW per ton compared to the previous quarter.

Jang Jaehyuk, a researcher at Meritz Securities, predicted that Hyundai Steel would continue to deliver solid results in the second half of the year.

He stated, "In the second half, we expect to see improved investor sentiment and a recovery in construction investment due to reduced domestic policy uncertainty, as well as domestic economic stimulus based on expansionary fiscal policy. Considering the effects of China’s production cuts and anti-dumping duties, both sales volumes and spreads are expected to remain at solid levels."

He further noted that Hyundai Steel’s share price has already priced in expectations for a market recovery after 2026.

Jang explained, "Market attention is focused on 2026 and 2027, when significant performance improvement is anticipated, backed by the imposition of anti-dumping duties and China’s production cut policies. The visibility of earnings recovery is expected to become even clearer through major events concentrated in the second half of the year."

He added, "Key events suggesting further steel production cuts are approaching, including the Central Political Bureau meeting and the Ministry of Industry and Information Technology’s announcement of key industrial plans at the end of July to early August, the possibility of additional production cuts ahead of the September Victory Day, and the announcement of the five-year plan in October. Accordingly, there is a high possibility that actual crude steel production will also decrease."

Jang stated, "If anti-dumping duties on hot-rolled steel sheets come into full effect from the fourth quarter, domestic companies are expected to expand their market share as import volumes decline," adding, "We maintain a Buy rating and a target price of 43,000 KRW."