[Edaily Reporter kyoungeun kim ] Although POSCO Holdings Inc. posted third-quarter earnings that exceeded market expectations, forecasts suggest that performance will weaken again in the fourth quarter. While the operating environment remains unfavorable—due to high interest rates, a sluggish steel market, and tariff barriers—analysts note that these negative factors have already been fully priced into the stock price, ensuring a degree of downside rigidity.

Yoon Kim, an analyst at iM Securities, stated this in a report on the 3rd and maintained a “Buy” rating and a target price of 400,000 won for POSCO Holdings Inc.(005490).

POSCO Holdings Inc.’s consolidated operating profit for the third quarter was 945 billion won, a 15.4% increase from the previous quarter, exceeding the consensus estimate of 812.8 billion won. Analyst Kim explained, “While the lithium-related subsidiaries returned to significant losses due to production cuts and weak lithium prices, strong performance from POSCO headquarters and POSCO FUTURE M drove the solid results.” POSCO’s operating profit rose 66.0% to 455 billion won due to increased sales volume and cost-cutting measures, while POSCO FUTURE M’s operating profit surged 207.8% to 82.1 billion won, driven by higher sales volume and compensation payments. POSCO E&C also posted better-than-expected results.

Consolidated operating profit for the fourth quarter is projected to be 425 billion won, a 55.0% decrease from the previous quarter. The parent company’s operating profit is expected to fall 45.6% to 248 billion won due to a decline in sales volume resulting from the overhaul of Gwangyang Blast Furnace No. 4. POSCO INTERNATIONAL(047050)is also expected to be affected by a decrease in cost recovery and the off-peak season for electricity, while the secondary battery materials division is projected to see larger inventory valuation losses due to falling lithium prices.

He assessed the business environment as unfavorable. Analyst Kim stated, “High interest rates are inevitable for the time being, and they have a negative impact on the prices of materials such as steel,” adding, “High interest rates are also the key reason why the upward trend in non-ferrous metal prices—such as zinc, where physical supply and demand are historically tight—has recently slowed.” He also predicted that the slump in the steel industry would continue. “Key indicators for Chonbang’s downstream industries are hitting record lows every month, and while crude steel production is declining, export volumes are actually increasing,” he noted. “It is safe to say that China’s steel supply and demand cannot improve without government intervention.”

Tariff barriers are also rising. Recently, major steel organizations, including the American Iron and Steel Institute, have urged their respective governments to introduce a tariff-rate quota (TRQ) on South Korean steel and impose higher tariffs on volumes exceeding the quota. Researcher Kim explained, “The basis for this argument is that while steel imports from other countries have decreased since the tariffs were imposed, imports of Korean rebar and steel pipes have actually increased,” adding, “As trade barriers are strengthened, only U.S. steelmakers within the region are reaping exclusive benefits.” U.S. hot-rolled coil prices have surpassed $1,400 per metric ton.

Nevertheless, he judged that the stock price has sufficient downside support. Researcher Kim said, “The current market capitalization of approximately 22 trillion won is a sufficiently attractive range, considering the value of the lithium division (approximately 10 trillion won).” He also predicted that lithium prices would soon stabilize. “The recent sharp drop in lithium prices was caused by an excessive concentration of short-term headwinds—including the European Union’s (EU) move to introduce import quotas for hybrid vehicles amid a high-interest-rate environment, noise in China’s inventory data, and an oversupply of batteries for energy storage systems (ESS),” he explained. “There are ample factors that will support lithium prices in the medium to long term, such as the spread of resource nationalism among major producing countries and supply disruptions caused by rising energy costs,” he analyzed.

However, he pushed back the timing of the earnings turnaround for the rechargeable battery materials sector from the second half of 2027, as originally expected, to 2028. Analyst Kim recommended POSCO Holdings Inc. as his second-choice stock within the sector, emphasizing that “the current stock price is not a cause for concern.”