Q2 earnings conference call

Seven data center orders secured; supply linked to mega projects

Auto, shipbuilding demand steady; Q2 operating profit at 57.7 billion won

Hyundai Steel's Dangjin plant. [Provided by Hyundai Steel]
Hyundai Steel's Dangjin plant. [Provided by Hyundai Steel]

Hyundai Steel said it expects raw material input costs to stabilize from the third quarter, setting the stage for a profitability recovery. The steelmaker plans to tap growing steel demand from AI infrastructure — including data centers and semiconductor factories — as a new engine of growth.

Speaking at the company's second-quarter earnings conference call on Monday, Park Hong, executive director of financial management at Hyundai Steel, said the company aims to become a key steel supplier for AI infrastructure by capitalizing on demand tied to South Korea's three national mega projects. "We established a dedicated team for power infrastructure, including data centers, at the start of the year, and on that basis we secured orders for seven new data centers," Park said.

Hyundai Steel said it will focus in the second half on winning new demand centered on AI and the energy sector. The company's strategy is to target infrastructure construction linked to the three mega projects and expand its supply of steel materials for core AI facilities.

Kim Sung-min, executive vice president and head of sales, said a data center requires 180,000 to 200,000 metric tons of steel per gigawatt of capacity, while a single memory chip factory is expected to need about 100,000 metric tons. "We have a total-package system capable of supplying everything from rebar and structural steel to hot-rolled, cold-rolled and thick plate products, and we have been supplying these to major construction companies since early this year," Kim said.

The company is also stepping up its response to the energy sector. Hyundai Steel said it has completed development and mass production readiness for high-spec thick plate used in nuclear containment vessels to meet rising demand for next-generation nuclear power plants, with samples set to be delivered to customers in the third quarter. The company also plans to expand into new demand with high-value-added materials, including high-durability powertrain components for hybrid vehicles and high-strength crane rails.

Kim said domestic automobile production has remained above 4 million units for four consecutive years and is expected to stay firm, while the shipbuilding industry is also seen sustaining solid demand through 2029 and 2030 on the strength of its order backlog. "Automotive price negotiations will take effect from August, but unit price increases are expected given the impact of higher raw material costs and exchange rates in the first half," he said, adding that the company is also pursuing price hikes for shipbuilding thick plate on the back of rising costs.

Raw material prices in the third quarter are also expected to stabilize, contributing to improved profitability. "The second quarter was the peak for input costs, and we expect raw material input costs to stabilize from the third quarter," Kim said.

Meanwhile, borrowings and the debt ratio are expected to rise temporarily due to investment in a US steel mill. "We expect annual investment over the next two to three years to slightly exceed 2 trillion won ($1.4 billion)," said Kim, who also serves as a vice president. "Net borrowings will modestly exceed 7 trillion won this year and next, but we plan to bring them back below 6 trillion won after that."

On the anti-dumping duty review for Chinese H-section steel, the company said it sees a high likelihood that the tariffs will be extended. "We attended the final public hearing at the end of last month, and stakeholders shared concerns that if the anti-dumping measures were lifted, large volumes of exports could flood overseas markets given China's sluggish domestic demand," the company said. "We expect the second review to also result in an extension."

Hyundai Steel disclosed Monday that it posted consolidated second-quarter sales of 6.11 trillion won and operating profit of 57.7 billion won. Sales rose 2.7 percent from a year earlier, while operating profit fell 43.3 percent. Compared with the previous quarter, sales climbed 6.4 percent and operating profit surged 267.5 percent. Net profit for the period came in at 12.1 billion won, swinging to a profit from a loss in the prior quarter.

Park said earnings hit a trough in the fourth quarter of 2025 and the first quarter of this year amid a prolonged slump in the steel market and have since been recovering. "Second-quarter operating profit rose sharply from the previous quarter, driven by expanded sales of high-value-added products such as automotive steel sheet and increased demand for long steel products as the peak season arrived," Park said.


eyre@heraldcorp.com