Input 2021.02.10 14:42
Hyundai Steel, which has a high proportion of blast furnaces, decreased by 78% to KRW 73 billion
While the steel industry was sluggish in the aftermath of last year’s coronavirus infection (Corona 19), Dongkuk Steel (001230)Has achieved the highest performance since 2010. Dongkuk Steel is the second largest in the industry after POSCO. Hyundai Steel (004020)It made more operating profits. The background is the control of production using electric furnaces and the promotion of high value-added products represented by colored steel sheets.
In the industry, there is an evaluation that the electric furnace has broken performance. Dongkuk Steel, which uses an electric furnace, operates a blast furnace (blast furnace). POSCO (005490)I was able to operate the factory in response to market conditions more nimble than Hyundai Steel. It is known that the electric furnace division also showed relatively good performance in Hyundai Steel, which accounts for a 6:4 ratio of blast furnace and electric furnace product sales.
An official in the steel industry said, “The blast furnace should be operated in a minimum quarterly basis, but the electric furnace can be controlled in two weeks. If the market conditions are bad, we will reduce production, and in the opposite case, respond by increasing production. “It was advantageous to increase profitability.”
Unlike the shipbuilding and automobile industries, which are major downstream industries of POSCO and Hyundai Steel, which were difficult due to the corona crisis, the home appliance market, which is a demand for color steel sheets called Dongkuk Steel’s’Hyoja’ products, also played a role. Dongkuk Steel is the No. 1 manufacturer of color steel sheets in Korea. Dongkuk Steel plans to increase the annual production of colored steel sheets from 750,000 to 85 tons from the second half of this year by expanding production lines.
In addition, long products such as rebar and H-beam, which account for half of Dongkuk Steel’s sales, also led the performance as demand from the construction industry supported it. Thanks to cost-saving activities and weak exchange rates, net profit recorded 67.3 billion won last year, turning it into a surplus after three years.
An official at Dongkuk Steel explained, “The flexible response to market volatility based on a portfolio composed of long and colored steel sheets has a positive effect on earnings.”
Dongkuk Steel achieved good results last year, but this year it has tightened its management rein. This is because it is uncertain whether or not to maintain profitability by raising product prices amid a sharp rise in raw material prices. As demand in China increased, the price of steel scrap (scrap metal) jumped, and the key is whether the sale price of long products can be continuously increased. As iron ore prices exceed $150 per ton, the price of hot-rolled steel, a raw material for color steel sheets and cold-rolled products, is also burdensome.
An official at Dongkuk Steel said, “Last year, we performed better than expected, but this year we are tense because of uncertainties. We will strengthen our competitiveness through profit-oriented management.”
