Exchange Rate at 1387 Won, Steel Companies Expected to See Cost Relief

The won-dollar exchange rate has risen by 1.0 won to 1387.00 won compared to the previous trading day, but it has maintained the 1300 won range since the 19th. This is expected to lower the cost burden for domestic steel companies purchasing iron ore and raw coal in dollars. POSCO stated that if the exchange rate falls by 10%, its pre-tax profit would increase by approximately 402.5 billion won. Hyundai Steel also reported that under the same conditions, its net profit would increase by about 67.6 billion won. In the first half of this year, POSCO raised the average selling price of carbon steel from 920,000 won in the first quarter to 962,000 won in the second quarter. The prices of Hyundai Steel's main products are also on the rise. The decline in the won-dollar exchange rate is expected to impact industries that use dollar-denominated raw materials and play a significant role in the cost structure of steel companies. Park Seong-bong, an analyst at Hana Securities, expects POSCO's steel product sales to reach 8.49 million tons in the third quarter, and mentioned that if price negotiations proceed, the steel spread could slightly widen.

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