[THE INVESTOR] US and China’s trade war truce has lifted concerns over deterioration of steel industry and even if the conflict prolongs, it is likely to be offset by increasing investment in infrastructure across the world, said Cape Investment and Securities on Dec. 4 maintaining a “buy” recommendation and 11,000 won (US$9.90) target price for Dongkuk Steel Mill.
Price of steel beams in China has been declining since the beginning of November but has not affected Korea yet. The recent weakening of steel scrap price will boost the firm’s earnings in the fourth quarter, said analyst Kim Mi-song.
Its operating profit in the third quarter on a standalone basis came in at 46.1 billion won. As the earnings from long product improves further, so will the operating profit in the fourth quarter. Despite decline in price in China, short supply of steel beams will bolster the rate in Korea and sales will be solid. Steel plates sales might decline but price will rise and slab price cut will improve margins, she added.
By Hwang You-mee (email@example.com)