U.S. antidumping tariffs may have limited impact on Korean steelmakers: analysts

Korean steelmakers will not suffer a direct impact from the U.S.’ antidumping tariffs, local analysts said Monday.

The U.S Department of Commerce on Friday made a decision to impose nearly 60 percent of antidumping duties on hot-rolled flat steel exported by Korean companies. 

Korea’s largest steelmaker POSCO, which is also the country’s No. 1 steel exporter to the U.S., received a total of 57.04 percent in duties, including the subsidy rate and the dumping margin.

Hyundai Steel received 13.38 percent in duties -- a 9.49 percent dumping margin and a 3.89 percent final subsidy rate.

Despite concerns, the performance of Korean steelmakers will not be immediately affected by the U.S. antidumping tariffs, some analysts said.

“The tariffs are definitely a concerning factor, considering that it can lead to steel volume expansion in the East Asian market, resulting in an overall price drop in the long run. Hot-rolled flat steel, itself, however, does not account much for the operating profit of POSCO and Hyundai Steel,” said analyst Baek Jae-seung at Samsung Securities.

The operating profit of POSCO and Hyundai Steel may drop by 11.2 percent and 1.7 percent, respectively, in the worst case but chances are low, Baek added.

As of last year, Korea exported 1.16 million tons of hot-rolled flat steel, with 800,000 tons from POSCO and 300,000 tons from Hyundai Steel. The hot-rolled flat steel is mainly used as a material for construction work and steel pipes.

By value, POSCO exported hot-rolled flat steel worth 395 billion won ($356 million) and Hyundai Steel exported 210 billion won worth. This makes up about 1.5 percent of the sales of each company.

Others projected that the aftermath of the antidumping tariff is inevitable.

“Supposing that hot-rolled flat steel exports are suspended and export circumvention is also impossible in the worst scenario, this would affect about 480 billion won of yearly sales and about 50 billion won of operating profit,” said analyst Park Sung-bong at Hana Financial Investment.

Park, however, anticipated that the exports would not entirely stop, as 70 percent of the concerned steel to the U.S. is sold from the joint corporation UPI.

Meanwhile, POSCO said it would consider bringing the tariff case to the World Trade Organization. The second-largest steelmaker Hyundai Steel said it is mulling countermeasures, with no decisions made so far.

By Lee Hyun-jeong  (rene@heraldcorp.com)