POSCO Future M Faces Unavoidable Slump in Cathode and Anode Material Sales [Click e-Stock]

Short-term Stock Weakness Expected
Gradual Market Recovery Anticipated from Next Year

Following a sluggish fourth quarter last year, POSCO Future M is expected to see weak sales volumes for both cathode and anode materials again this year. Analysts attribute this largely to the production halt at its key client, Ultium Cells.

On January 5, NH Investment & Securities maintained its 'Neutral (HOLD)' rating for POSCO Future M, citing these factors, and lowered its target price by 17% to 190,000 won. The previous trading day's closing price was 176,900 won.

Ultium Cells, a battery manufacturer jointly invested in by LG Energy Solution and General Motors (GM) with each holding a 50% stake, is expected to suspend operations in the first half of the year due to weak demand in the United States and inventory burdens. Ultium Cells' shipments to GM are projected to plunge from 28 GWh last year to 6 GWh this year.

As a result, POSCO Future M's shipments of both cathode and anode materials are also expected to slow significantly. NH Investment & Securities estimates this year's cathode material shipments at 41,000 tons and natural anode material shipments at 18,000 tons, representing decreases of approximately 10% and 14%, respectively, compared to the same period last year. Nevertheless, the company is expected to maintain profitability relative to sales thanks to rising lithium prices.

NH Investment & Securities forecasts that cathode and anode material performance will begin to recover from 2027. For cathode materials, this is attributed to the base effect and the start of operations at the Pohang LFP plant. The in-house LFP plant (estimated at 15,000 tons) is scheduled to begin operations early next year, while the LFP joint venture plant (estimated at 12,500 tons) is expected to start operations at the end of next year. These are presumed to be for sales to Samsung SDI's North American energy storage system (ESS) business.

For anode materials, the key factor will be the finalization of anti-dumping and countervailing duties, which are expected to be determined early in the year. Even if imposed, considering grace and preparation periods, the company is expected to benefit starting next year. Anode material contracts secured from North American original equipment manufacturers (OEMs) are also expected to begin sales next year. Juminwoo, a researcher at NH Investment & Securities, commented, "Given the current market conditions, short-term stock price weakness appears inevitable," adding, "However, with the start of operations at the LFP plant and sales to North American OEMs beginning next year, performance is expected to recover gradually."