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Solid steel performance vs. uncertain subsidiary earnings

3Q25 preview: Below-consensus results likely

For 3Q25, we expect POSCO Holdings to report consolidated revenue of W17.4tr (-5.2% YoY) and operating profit of W570.2bn (-23% YoY), with the latter missing the consensus (W631bn) by 10%. Despite seasonally strong demand in the previous quarter, we expect steel operating profit to expand QoQ on improved spreads (with raw material prices falling more steeply than ASP). However, we expect consolidated operating profit to remain weak due to widening losses at POSCO E&C and continued losses in the energy materials business. POSCO E&C temporarily halted work across its construction sites due to recent accidents, which likely resulted in both direct and indirect costs. Meanwhile, losses in the energy materials business are likely to narrow due to increased sales at POSCO Future M and a rebound in lithium prices.

Solid steel business vs. continued uncertainties over subsidiary earnings

We expect steel spreads to continue to improve through year-end. Selling prices should continue to recover, supported by the imposition of antidumping duties of around 30% on Chinese and Japanese hot-rolled steel (following similar duties imposed earlier on Chinese heavy plates). Hot-rolled steel prices should increase gradually as inventories procured prior to the antidumping announcement are depleted. For shipbuilding-grade steel plates, negotiations are reportedly underway for a W30,000/tonne price hike. In addition, prices of iron ore and coking coal (key raw materials) are stabilizing, contributing to spread improvement.

However, subsidiary earnings will likely remain uncertain. In particular, POSCO E&C faces extended uncertainty, as the investigation into the Sinansan subway line accident has been extended by four months (to Jan. 2026), prolonging associated uncertainties. Given the project’s contract value of roughly W1.5tr and progress rate of 56%, we see high potential for additional cost recognition.

Maintain Buy and TP of W430,000

We maintain our Buy rating and target price of W430,000 on POSCO Holdings. Despite solid earnings from the steel segment, short-term earnings momentum will likely remain limited due to weakness at subsidiaries. On a positive note, in October, the government is set to announce plans to enhance the steel sector’s competitiveness, including R&D and financing support, incentives to divest non-core businesses/assets, and stronger safeguards against import duty circumvention. Additionally, overseas steel investments―including Hyundai Motor Group’s US electric arc furnace project, upstream operations in partnership with India’s JSW, and the Whyalla steel plant in Australia―are likely to take clearer shape.