Hyundai Steel returns to profit on high demand and solid pricing

Hyundai Steel reported 595.9 billion won ($510 million) in consolidated net profit in the third quarter, compared with a 44.7-billion-won net loss in the same quarter a year earlier.

Korea’s No. 2 steelmaker said its July-September net profit was up 69 percent from the previous quarter in a preliminary report released Thursday.

Sales were 5.8 trillion won ($5 billion), up 31.3 percent on year. The market estimate was 6.2 trillion won.

The company’s operating profit was up 2,374 percent on year to a record high of 826.2 billion won, beating the market estimate of 759.6 billion won.

Hyundai Steel credited strong demand and solid pricing for the turnaround. It mentioned specifically steel plate used for shipbuilding and high-strength reinforcing rebar.

The price of iron ore – the core material for steel – rose as high as $226.46 per ton on May 14, but the price has gradually fallen. It was $121.78 as of Oct. 22.

Premium products accounted for 43 percent of the company’s total sales, or 6.18 million tons.

The steelmaker said that it projects earnings to remain strong along with the recovery of construction, automaking and shipbuilding.

“There is a possibility that the price of high-strength steel will rise further in the fourth quarter,” Lee Jong-hyung, an analyst at Kiwoom Securities, wrote in a report on Oct. 18.

China’s cutback on steel production, as it works to curb carbon emissions, is also expected to keep steel prices high.

Lee added that plans to build new apartments this year will support earnings at least through first half of next year.

Hyundai Steel shares fell 2.4 percent Thursday to 44,600 won.

BY JIN MIN-JI [jin.minji@joongang.co.kr]