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Photo = Yonhap news |
[Alpha Biz= Kim Sangjin] NH Investment & Securities lowered its target price for Hyundai Steel from 40,000 KRW to 32,000 KRW, a 20% reduction, citing slow profitability recovery due to the rapid rise in exchange rates and weak steel demand. However, the investment firm maintained its "Buy" rating on the stock.
According to NH Investment & Securities, the steel industry is still facing a sluggish market, with concerns about worsened steel demand from President Trump's tariff wars and the recent surge in exchange rates. These external factors, including domestic political uncertainty and the sharp rise in the won-dollar exchange rate, are expected to delay the recovery of profitability more than previously anticipated.
Despite these challenges, the firm expects steel demand to improve due to China's upcoming economic stimulus measures. If Chinese steel demand recovers, it could lead to a reduction in China's steel exports, which may drive up steel prices. While strong signs of recovery in Chinese steel demand have not yet emerged, the 3.2% year-on-year increase in China's real estate sales area in November, the first rise since June 2021, is considered a positive sign.
Additionally, the increase in domestic construction starts could lead to higher demand for long steel products, which is an important indicator. Although demand for rebar and H-beams in South Korea decreased by about 20% as of October, major steelmakers are implementing production cuts to offset the decline.
AlphaBIZ Kim SangJin(letyou@alphabiz.co.kr)
