【出版时间及名称】：2009年11月韩国钢铁行业研究报告
        【作者】：KOREA INVESTMENT
        【文件格式】：PDF
        【页数】：45
        【目录或简介】：
2010 outlook – Flashback to 2002
Maintain Overweight
We expect Korean steelmakers to enjoy fat profits in 2010 with the beginning of
a virtuous cycle. In 2010, the following three indicators 1) the KIS steel sector
cycle, 2) the Korean economy’s current cycle and 3) the global GDP growth rate
should all move like they did in 2002 when the sector entered the previous
virtuous cycle. This explains our view that 2010 will be reminiscent of 2002. But,
nonferrous metal prices will see weaker growth since 1) the supply and demand
of zinc and lead will be balanced, 2) China’s net imports of nonferrous metals will
dwindle, and 3) expected inflation will likely decline.
Steel profits to expand with the virtuous cycle
In 2010, the virtuous cycle will arise in the steel sector (steel demand growth
amid the economic economy → increase in steel production volume → greater
demand for raw materials → rise in raw materials prices → steel product price
hikes → pent-up demand creation with higher product prices → increase in
production volume). Crude steel production volume, utilization rates, raw
material and steel product prices, production activities in downstream sectors,
inventory in the downstream and steel sectors all support the virtuous cycle’s
emergence in 2010.
2010 major issue 1 – Growth of HR production capacity
HR production capacity should increase 10mn tonnes (POSCO’s 4mn tonnes,
Hyundai Steel’s 3mn tonnes, and Dongbu Steel’s 3mn tonnes) in 2010. HR coil
capacity should expand 5.3mn tonnes but the actual increase will be 3.3mn
tonnes considering utilization rates and capacity expansion period. Heavy plates
should also witness 5mn tonnes of additional capacity (POSCO’S 2mn tonnes,
Hyundai Steel’s 1.5mn tonnes, and Dongkuk Steel Mill’s 1.5mn tonnes) but
actual growth will be 2.9mn tonnes. Despite capacity increases, HR coils and
heavy plates will continue to suffer from undersupply due to lower imports but
greater consumption.
2010 major issue 2 – RMB appreciation
If the RMB appreciates, China’s steel export prices will rise and this will help
Korean steelmakers by raising global steel prices and lowering imports from
China. If global steel prices climb, domestic prices should also follow suit.
Moreover, if Chinese imports, which account for 19% of total imports, become
costly, imports should dwindle and domestic shipment volumes should rise to
replace reduced imports.
POSCO is our top pick / Hyundai Steel and Poongsan are also attractive
POSCO will strengthen its competitiveness from 2010 with the additions of
domestic production capacity and aggressive overseas market penetration. The
counter stands to benefit the most from the economic recovery. For Hyundai
Steel, quantitative profit growth is unlikely in 2010 due to higher expenses from
the operation of its blast furnace. Nonetheless, we value its visible long-term
growth potential. Poongsan has the lowest valuation in the KIS steel and
nonferrous metals sector.