Amid sluggish domestic demand and the aggressive push of low-cost Chinese steel products, Korea's major steelmakers are facing tough conditions, and the industry’s Q1 performance is expected to sharply decline. However, with seasonal demand recovery and government anti-dumping measures, there are signs that efforts are being made to turn the tide in Q2.

According to industry sources on the 14th, more than 200 construction companies in China purchased a total of 5.14 million tons of construction steel in March, marking a 23.6% increase from the previous month. The estimated purchase volume for April is projected to reach 5.91 million tons. With the seasonal peak period arriving in most regions of China, construction steel demand is rising, leading to optimistic projections that the oversupply in the local steel market may ease somewhat. Chinese steel companies, which produce around 1 billion tons annually, have been shifting export volumes abroad due to domestic stagnation, leading to a surge of competitively priced Chinese steel products into the Korean market, directly impacting domestic steelmakers.

The steel industry is facing a tough business environment ahead of Q1 earnings announcements. Securities firms predict poor results for major steelmakers. Financial data firm F&Guide estimates that the combined operating profit of the three major steel companies for Q1 will decrease by 16% year-on-year, totaling approximately 580 billion won. Hyundai Steel's performance is expected to stand out with a significant decline. Hyundai Steel’s Q1 revenue is expected to be 5.5615 trillion won, with an operating profit of 25 billion won, marking a 96% decline from the same period last year.

Industry sources suggest that Hyundai Steel's operating profit could potentially fall into the red due to additional costs from a strike at its Dangjin plant and inventory valuation losses, which could total around 90 billion won.

Dongkuk Steel is also expected to report disappointing results. Dongkuk Steel’s Q1 operating profit is expected to be 12.6 billion won, marking an 86% decrease from the same period last year. The primary factors behind the decline include reduced sales of rebar and long steel products due to the prolonged slump in the construction sector.

POSCO, among the major steelmakers, is expected to perform relatively well. POSCO Holdings' Q1 operating profit is expected to be 565 billion won, a 3.1% decrease from the same period last year. Compared to other steelmakers, this decline is relatively mild, and considering the previous quarter’s operating profit of 95.4 billion won, there is widespread optimism about a significant improvement in POSCO’s performance.

The industry remains hopeful for a recovery in Q2. Hyundai Steel, in particular, is seen as well-positioned for a recovery as it has recently resolved labor disputes, which could help normalize production and meet the expected demand surge in the peak season. Additionally, the Korean government’s decision to impose anti-dumping duties of up to 38% on Chinese hot-rolled steel is expected to create favorable conditions for price increases, which is a positive factor. Domestic steelmakers are also taking measures, such as fully shutting down production of long steel products, to maintain supply-demand balance.

An industry insider commented, "Given the increasing market uncertainty due to the U.S.'s aggressive tariff imposition, concerns remain that the rise in steel demand in China could be limited. However, there is cautious optimism that both prices and demand have reached their bottom, and we may see gradual recovery moving forward."

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