Hyundai Steel extends profit streak in Q2 on brisk auto steel sales

Hyundai Steel Co., South Korea’s second-largest steelmaker, plans to ramp up automotive and eco-friendly steel production after posting an operating profit for the second quarter in a row thanks to strong automotive steel demand and brisk sales of steel bars.

The steel-making unit under Korean auto behemoth Hyundai Motor Group on Wednesday reported that its operating profit in the second quarter ending in June stood at 465.1 billion won ($364.6 million) on a consolidated basis, down 43.4% from the same period a year earlier but up 39.3% from the previous quarter.

It was the second consecutive operating profit after it returned to the black in the first quarter from a loss in the final quarter of last year. The latest result also came in above Yonhap Infomax’s consensus of 420.9 billion won.

Sales in the April-June period reached 7.2 trillion won, down 3.3% on-year but up 11.7% on-quarter, while its net profit lost 48.2% on-year to 293.5 billion won.

Hyundai Steel shares ended down 4.5% at 32,900 won on Wednesday.

BRISK SALES OF AUTOMOTIVE STEEL PLATES

The company maintained its profit streak in the previous quarter thanks to strong sales of hot and cold rolled plates for cars, as well as steel bars and sections, which have entered their traditional peak season, it explained.

The Korean steelmaker will continue to enhance new automotive steel lineup after already securing orders of new steel products and parts for electrified vehicles, the demand of which has been growing rapidly.

“Hyundai Steel plans to produce and sell 5.3 million tons of (automotive) steel to meet the rise in steel orders from Hyundai Motor and Kia,” Kim Won-bae, a senior managing director at Hyundai Steel, said during an earnings conference call on Wednesday.

“We have also welcomed four global finished carmakers as our new customers and plan to raise automotive steel sales to 20% of our entire steel sales this year.”

Hyundai Motor Co. and Kia Corp. are Hyundai Steel’s finished car-making affiliates.

Kim expects automotive steel demand to remain solid on higher exports this year, and forecasts the price of steel plates to rebound on solid ship orders.

NEW DEMAND WITH GREEN STEEL AMID RECOVERY

Hyundai Steel will seek to raise automotive steel prices later this year to reflect the rise in raw material prices, Kim said, hoping for a small increase in August.

Hyundai Steel also forecast an upturn in the Chinese steel market on Beijing’s anticipated economic stimulus measures, which would bode well for international steel prices.

In response to anticipated growth in steel demand later this year, the Korean steelmaker is tapping new demand with eco-friendly steel products also for construction and through its online steel marketplace, HCORE STORE, which opened in May.

It also plans to accelerate its carbon-neutral initiative and develop low carbon-emitting steel products under the new brand HyECOsteel, through a revamped furnace production process.

The company unveiled its carbon neutrality roadmap in April with a plan to build an electric-blast arc combined furnace complex, which is expected to emit less carbon dioxide.  

Under the new vision, it will invest 150 billion won through 2025 to upgrade the existing electric furnace to produce 4 million tons of eco-friendly steel plates with 20% less carbon emission annually.

Write to Hyung-Kyu Kim at khk@hankyung.com
Sookyung Seo edited this article.