South Korea: Hyundai Steels production, sales rise q-o-q in Q2CY23

South Korean steel major, Hyundai Steel, has released its financial results for second quarter of calendar year 2023 (Q2CY'23). The company's production, sales and revenue increased q-o-q in Q2.

Crude steel production rises by 4% q-o-q: The company's crude steel production rose by 4% q-o-q to 4.93 million tonnes (mnt) in Q2 compared with 4.76 mnt in the previous quarter. However, y-o-y, production marginally dropped 1% against 4.99 mnt in Q2CY'22.

Sales volume increases 4% q-o-q: Sales volumes were recorded at 4.89 mnt in Q2CY'23, increased by 4% compared with 4.70 mnt in the preceding quarter. Y-o-y, the same inched up by 1% against 4.86 mnt in the same period last year. Sales volumes increased due to long's seasonality issue and an increased demand for auto sheet.

Revenue up 5% in Q2: Revenue rose by 5% q-o-q to KRW 5,863 billion ($5 billion) in Q2 against KRW 5,604 billion ($4 billion) in the past quarter. However, y-o-y, revenue fell by 10% from KRW 6,546 billion ($5 billion) in Q2CY'22.

Demand scenario in Q2CY'23

Construction orders slow down: Private orders in the construction sector declined in Q2 amid slowdown in construction activity as higher interest rates impacted economy. In addition, demand from the real estate market remained sluggish. Orders from the construction sector decreased by 16.3% y-o-y to KRW 77 t in January to May 2023.

Automobile production rises on strong demand: Korea's automobile production surged 23.5% y-o-y to 2.20 million units in the first half of 2023 (H1'23) compared to 1.78 million units in H1'22. Moreover, production volumes improved on strong demand for autos and decrease of supply bottlenecks with easing supply chain disruptions. Also, automobile exports rose as global demand improved.

Shipbuilding orders recover: Shipbuilding backorders rose by 9.3% to 38.8 million CGT (compensated gross tonnage) in June 2023 against 35.5 million CGT in December 2022.

Outlook for Q3CY'23

In Q3CY23 results are expected to be weak. In the electric furnace sector, competition in the domestic market is expected to intensify due to the sluggish domestic construction market and an increased supply. However, prices for automotive steel sheets are expected to rise slightly in the second half of the year.