Posco, Hyundai Steel Q1 performance slump on Trump tariffs with rocky Q2 ahead

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Posco, Hyundai Steel Q1 performance slump on Trump tariffs with rocky Q2 ahead

Published: 25 Apr. 2025, 13:55 Updated: 25 Apr. 2025, 14:24

Audio report: written by reporters, read by AI

Hydrogen production and storage facilities at Posco’s Pohang Steelworks in Pohang, North Gyeongsang [YONHAP]

Korea’s leading steel producers, Posco Holdings and Hyundai Steel, reported significant declines in first quarter earnings as U.S. tariffs and weakening global demand continued to weigh on the industry.

Consolidated revenue at Posco Holdings fell 3.4 percent to 17.44 trillion won ($12.1 billion) in the first quarter, and operating profit slid 2.5 percent to 568 billion won over the same period, the company announced Thursday.

Posco, the steelmaking subsidiary of Posco Holdings, reported weaker results in the first quarter.

On a stand-alone basis, Posco posted revenue of 8.97 trillion won and a net profit of 220 billion won during the January-to-March period, with revenue down 5.8 percent and net profit down 4.3 percent compared to the same period of last year.

The decline was largely due to a drop in product shipments, which fell from 8.23 million tons in the first quarter of last year to 8.15 million tons this year.

Operating profit, however, showed a modest improvement, rising from 295 billion won in the first quarter of 2024 to 346 billion won this year.

“Although sales volume decreased, lower raw material costs contributed to the improvement in operating profit,” a Posco official said.

The overall decline in performance is largely attributable to the 25 percent U.S. tariff on imported steel that took effect on March 12. With the tariff, the annual quota of 2.63 million tons that had exempted Korean steel from duties was eliminated.

Korea’s monthly steel exports to the United States in March fell 15.7 percent to $1.04 billion from last March, according to the Korea International Trade Association.

There had been expectations that the removal of the import quota system under the Donald Trump administration might boost sales of high-grade steel, but even that has proven difficult.

During a conference call, Hong Yoon-sik, head of Posco’s marketing strategy division, expressed concern, saying, “U.S. regulators monitor in real time not only the volume, but also the types of steel being imported from Korea and other countries. If exports of a particular product increase sharply, it could trigger additional sanctions.”

Hyundai Steel reported weaker results than Posco.

Workers move around the facility in Incheon on April 1 as the full shutdown of the rebar plant at Hyundai Steel’s Incheon Works begins. [YONHAP]

The company announced that in the first quarter of this year, it had recorded 5.5 trillion won in revenue, an operating loss of 19 billion won and a net loss of 54.4 billion won.

Revenue fell 6.5 percent year-over-year, and both operating profit and net income turned to losses compared to the first quarter of 2024. Hyundai Steel also posted an operating loss of 45.8 billion won in the fourth quarter of last year.

The losses are believed to have been exacerbated by a combination of weakening domestic construction demand, the U.S. tariffs imposed by the Trump administration and a temporary production halt in February.

Since last September, the company and its labor union had been locked in a prolonged standoff — lasting around seven months — over performance bonuses in the 2024 wage and collective bargaining talks.

The company enforced its first-ever lockout on Feb. 24, halting steel production for about two weeks.

Hyundai Steel’s Incheon Works in Incheon [YONHAP]

Although labor and management reached a settlement in mid-April to provide an average performance bonus of 27 million won per employee, the company incurred losses in the tens of billions of won as a result.

Amid ongoing challenges, analysts predict that Korea’s steel industry is unlikely to see a meaningful recovery in second-quarter performance.

The reimposed U.S. tariffs under the Trump administration continue to restrict export opportunities, while volatility in raw material prices adds further pressure.

The price of iron ore, which stood at $91.18 per ton on Sept. 16 last year, had risen to $98.96 as of April 14, hovering around the $100 mark, according to the Korea Resources Information Service.

Although steelmakers face pressure to raise prices, many are delaying adjustments due to concerns over weakening market share.

“Even if export volumes to the U.S. decline due to the Trump tariffs, rising prices could help Korean steelmakers maintain profitability, said Lee Jae-yoon, a research fellow at the Korea Institute for Industrial Economics and Trade. “However, global protectionist trade policies, including the U.S. tariffs, may ultimately lead to a decline in global steel demand, which poses risks to Korean firms’ earnings.”

Some short-term relief is still expected in the domestic market.

The Ministry of Trade, Industry and Energy has imposed emergency antidumping duties of up to 38.02 percent on Chinese steel plate, effective from April 24 through Aug. 23, a move likely to help Korean producers recover market share.

In the longer term, industry officials point to the joint investment by Posco and Hyundai Steel in a U.S.-based steel mill as a key strategy to strengthen their presence in the U.S. market.

Hyundai Motor Group is investing $5.8 billion to build an electric arc furnace facility in Louisiana with an annual capacity of 2.7 million tons — 1.8 million tons of automotive steel and 900,000 tons of general-purpose steel. Posco Group is participating as a strategic investor.

There are also expectations that Posco and Hyundai Steel will expand cooperation in both overseas and domestic business areas.

“We are working with Posco on the U.S. investment project and discussing various forms of cooperation in domestic operations as well, " said Choi Sang-geon, executive vice president of strategy at Hyundai Steel. “We expect good results.”

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY KIM HYO-SEONG [[email protected]]