Hyundai Steel is forecast to see its Q2 operating profit decline more than 20% year-over-year due to high exchange rates and rising raw material costs. Yonhap Infomax compiled Q2 2026 earnings forecasts from five major domestic securities firms, projecting operating profit of 77.4 billion won, down 23.89% from the same period last year, while revenue is expected to reach 6.1298 trillion won, up 3.1%. The company achieved external growth driven by reduced Chinese imports and expanded exports to North American datacenters, though profitability pressures mounted from currency fluctuations and input cost inflation in the steel industry.
Hyundai Steel Q2 Operating Profit Forecast Drops 23.89% Year-Over-Year
Yonhap Infomax aggregated earnings forecasts from five major domestic securities firms submitted within one month. The consensus projects Hyundai Steel's Q2 consolidated operating profit at 77.4 billion won, representing a 23.89% decrease compared to the same period last year. Revenue is expected to grow 3.1% to 6.1298 trillion won.
Q2 traditionally marks the peak demand season for steel with increased shipment volumes. However, the rising won-dollar exchange rate increased raw material procurement costs during the quarter.
High Exchange Rates and Iron Scrap Prices Pressure Margins
The elevated exchange rate environment raised costs for imported raw materials. Iron scrap prices used in electric arc furnaces rose significantly, deteriorating profitability.
Domestic steelmakers increased production volumes to meet expanded exports of rebar to the US. This intensified competition for domestic iron scrap procurement, driving prices sharply higher. The combined burden of high exchange rates and raw material costs partially offset product price increases, limiting profit generation below initial expectations.
Analysts Project Q3 Recovery on Price Increases
Q3 is expected to see earnings recovery as distribution price increases take effect. Improvements in spreads for both flat products and rebar are viewed positively.
Park Sung-bong, analyst at Hana Securities, stated that domestic rebar distribution prices continued rising in Q2, but Hyundai Steel's high proportion of fixed contracts with major construction companies prevented full reflection of price increases in Q2 results. He projected additional reflection in Q3, with rebar spreads expected to expand again in Q3.
Chinese Import Decline and US Datacenter Demand Support Growth
Securities firms noted changes in the operating environment. Following anti-dumping tariffs on Chinese hot-rolled steel, import volumes decreased and domestic hot-rolled steel prices rose. Increased rebar exports reduced domestic supply, supporting rebar distribution prices.
US-bound exports are analyzed to have a dual effect of resolving domestic oversupply while expanding the company's external growth. Rising datacenter construction demand is forecast to increase high-value product sales ratios and drive long-term earnings.
The key challenge for Hyundai Steel in the second half is normalizing profitability through price increases for major products. The company is currently pursuing price increases reflecting raw material cost increases with major customers for automotive steel sheets and shipbuilding thick plates.
FAQ
What is Hyundai Steel's Q2 operating profit forecast?
Yonhap Infomax compiled forecasts from five major securities firms projecting Hyundai Steel's Q2 operating profit at 77.4 billion won, down 23.89% year-over-year, with revenue expected at 6.1298 trillion won, up 3.1%.
Why did Hyundai Steel's Q2 profitability decline?
High won-dollar exchange rates increased raw material procurement costs, while iron scrap prices rose due to intensified domestic competition as steelmakers expanded production for US rebar exports, pressuring margins despite product price increases.
When is Hyundai Steel's earnings recovery expected?
Analysts project Q3 recovery as distribution price increases take full effect, with Park Sung-bong of Hana Securities stating that price increases not fully reflected in Q2 due to fixed contracts with construction companies will be reflected in Q3.
