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Steel was the lone bright spot in 2Q25

2Q25 review: Sluggish overall, except for steel

For 2Q25, POSCO Holdings posted consolidated revenue of W17.6tr (-5.1% YoY) and operating profit of W607bn (-18.7% YoY), with the latter missing the consensus (W652bn) by 6%. The steel business led overall earnings, with operating profit surging more than 20% YoY on wider spreads and a 4% YoY increase in sales volume. Meanwhile, operating profit from the infrastructure business slumped 46% YoY, as: 1) POSCO E&C swung to a loss on the recognition of additional costs at overseas projects; and 2) POSCO International saw a decline in power generation ASP. The energy materials business saw its operating loss widen QoQ due to decreased cathode materials sales (POSCO Future M) and deteriorating lithium business profitability. Consolidated pretax profit contracted, mainly due to FX valuation losses and the recognition of impairment losses related to POSCO International’s asset sales.

Steel profitability to continue improving

Steel profitability is likely to continue improving in 2H25. Cost pressures are easing on falling raw material prices and a lower USD/KRW rate, while recent preliminary rulings on antidumping petitions against Chinese and Japanese hot-rolled steel (which followed an earlier ruling on Chinese heavy plates) should support further ASP/spread improvements.

On Jul. 24, the Korea Trade Commission (KTC) announced a preliminary decision to recommend the imposition of provisional antidumping duties on hot-rolled steel imported from China (28.16?33.1%) and Japan (31.58?33.57%). Earlier, similar duties imposed on Chinese heavy plates supported a margin recovery on steel supplies to shipbuilders; we think a similar positive outcome is likely in the current case.

Maintain Buy and TP of W430,000

We maintain our Buy rating and target price of W430,000 on POSCO Holdings. The Chinese government is reaffirming its commitment to steel output cuts, suggesting oversupply will ease. According to the World Steel Association, crude steel production in China declined 6.8% YoY in May and 9.2% YoY in June―larger declines than the global averages (-3.8% YoY and -6.2% YoY, respectively). Moreover, the recent rebound in lithium prices (+17.5% MoM), if sustained, could support a recovery in the value of the energy materials business.