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Kallanish Kallanish

Knowledge matters Knowledge matters

April, 2nd 2020

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FEB 25

Hyundai Steel sees profit squeezed in 2019


South Korea's Hyundai Steel saw 2019 profit dragged down by higher raw materials costs and falling margins. Its overseas subsidiaries also saw worse profitability, Kallanish notes.

Total steel production dropped by -1.21% year-on-year in 2019 to 21.22 million tonnes, including 9.36mt of EAF steel, which was down by -3.31%. This was due to shrinking construction demand in the second half-year. Consolidated revenue declined by -1.28% y-o-y to KRW 20.513 trillion ($16.93 billion), resulting from lower sales volumes and prices following the demand slowdown. Net profit slumped by -93.63% to KRW 26 billion.

The steelmaker says the price of iron ore last year reached $120/tonne, but this increase could not be reflected in its own automotive steel prices due to the sluggish automotive sector. 

“Uncertainties in the management environment are continuing in 2020, with the imbalance in the global supply and demand of products and unstable international situations,” says a company spokesperson.

In 2020, the company plans to sell 21.378mt of steel compared to 21.316mt in 2019. It anticipates the construction and automotive demand recovery will be limited. Shipbuilding orders could improve, depending on global trade increasing and the competitiveness of Korean shipbuilders.

Construction investment, however, is estimated to drop by -2.69% y-o-y to KRW 253 trillion. Automotive production may also shrink by -0.25% y-o-y to 3.94 million units. Shipbuilding construction volume, though,  is expected to increase by 3.55% y-o-y to 9.34 million compensated gross tonnes.