Hyundai Steel eyes return to W1tr profit for first time in 5 years

Next year's operating profit forecast more than double this year's

Some analysts see profit topping 1 trillion won next year

China output cuts, stable raw material costs seen as key drivers

Hyundai Steel's Dangjin steelworks. [Hyundai Steel]

Hyundai Steel, whose operating profit had slumped to the 100 billion won ($74.7 million) range, is now setting its sights on a return to the 1 trillion won level. While that would still fall short of the boom years when the steelmaker posted annual profits of around 2 trillion won, analysts say the prolonged steel downturn has bottomed out and a rebound is underway.

According to financial data provider FnGuide, the average analyst consensus for Hyundai Steel's consolidated operating profit next year, compiled over the past month, stands at 669 billion won — up about 128 percent from the 293.2 billion won forecast for this year. Operating profit is projected to climb further to 769.8 billion won in 2028, pointing to a sustained earnings recovery.

Hyundai Steel posted a record 2.45 trillion won in operating profit in 2021, when the steel industry was booming, followed by 1.62 trillion won in 2022. Earnings then collapsed — falling to 798.3 billion won in 2023 and 159.5 billion won in 2024, wiping out 93.5 percent of operating profit in just three years. Last year brought a modest recovery to 219.2 billion won, but that was still only about 9 percent of the 2021 peak.

Hyundai Steel annual operating profit trend

Industry watchers expect the earnings recovery to gain momentum from next year, with many saying the steel sector's long downturn cycle is ending and a gradual upturn is beginning. Some see the recovery moving faster than the consensus. Korea Investment & Securities estimates Hyundai Steel's operating profit will reach 1.16 trillion won next year and 1.37 trillion won in 2028 — well above market consensus. If those projections hold, the company would reclaim the 1 trillion won threshold for the first time in five years and by 2028 would earn roughly six times what it made in 2025.

Expectations of a rebound in global steel demand and an easing of China-driven oversupply underpin the optimistic outlook for Hyundai Steel.

In its short-range outlook released Monday, the World Steel Association forecast global steel demand at 1.72 billion tons this year — roughly flat from last year — before rising 1.7 percent to 1.75 billion tons next year.

Domestic steel demand is also expected to recover gradually. South Korea's steel consumption, which plunged 8.9 percent last year, is forecast to rise 1.8 percent to 44.4 million tons this year and a further 1.3 percent to 45 million tons next year. That points to a possible end to the prolonged demand slump, even if the pace of recovery remains modest.

"Steel demand outside China grew 1.5 percent this year and is expected to accelerate to 4.0 percent growth next year — a rate we have rarely seen of late," said Alfonso Idalgo de Calcerada, chair of the World Steel Association's economics committee. "The recovery we anticipated in April has not weakened. It is simply being obscured by China's structural demand contraction and the disruption in energy markets caused by instability in the Middle East," he added.

Cold-rolled steel sheet produced at Hyundai Steel's Dangjin steelworks. The material is used as a key steel component in energy storage system enclosures. [Hyundai Steel]

Alongside the demand recovery, adjustments to China's steel supply are seen as another driver of improving industry conditions. Analysts say that if China's government succeeds in curbing steel output and infrastructure investment under the 15th Five-Year Plan (2026–2030) materializes, the supply-demand balance could improve. Rising steel consumption in emerging markets such as India and Vietnam is also expected to support the global demand recovery.

Stabilizing raw material costs are seen as an additional boost to profitability. Expanded production capacity at major mining companies and the start of output at the Simandou iron ore mine in Guinea are expected to increase iron ore supply and ease upward price pressure. When steel product prices recover while raw material costs remain stable, the spread between the two widens — and given the steel industry's high fixed-cost structure, even a modest improvement in that spread can translate into a significant jump in operating profit.

Hyundai Steel itself is expected to benefit as price increases for automotive steel sheet and heavy plate take full effect, and as sales volumes lost to the off-season and labor strikes recover.

Aerial view of Hyundai Steel's Incheon factory. [Hyundai Steel]

Uncertainty remains, however. Even if domestic steel demand turns positive, a prolonged slump in the construction sector could limit the recovery in demand for construction-grade steel products such as rebar and structural sections. In China, if domestic demand falls faster than production is cut, the pressure of low-priced exports could persist.

Hyundai Steel's planned electric arc furnace steelworks in Louisiana, with an annual capacity of 2.7 million tons, is also cited as a medium- to long-term growth driver. Commercial production is not scheduled to begin until the first quarter of 2029, however, meaning it will be some time before the facility makes a meaningful contribution to earnings.

"The steel industry has reached a cyclical turning point, closing out a historic long-term down cycle that lasted nearly 20 years," said Choi Moon-sun, an analyst at Korea Investment & Securities. "As China's steel output adjustments, the global demand recovery and improving raw material supply conditions converge, profitability across the steel sector will gradually improve," he added.

kwater@heraldcorp.com