The Korean steel industry seems to be turning a corner after a challenging first quarter of 2026.
The narrative of a Q2 recovery is gaining strength, built on a foundation of protective government policies, restored pricing power, and supportive external conditions. This isn't about a sudden surge in demand, but rather a strategic recovery of profitability.
First, the most significant change is the government's 'policy shield.' In April, the Korea Trade Commission (KTC) recommended imposing provisional anti-dumping duties of over 22% on certain coated steel products from China. For a long time, low-priced Chinese imports have suppressed domestic steel prices. This measure effectively blocks that channel, giving Korean companies the breathing room they need to raise their own prices without immediately being undercut.
Second, Korean steelmakers are flexing their 'pricing power.' Following the KTC's move, major players like POSCO and Hyundai Steel successfully raised their domestic distribution prices in April. For example, the price of hot-rolled steel coils jumped over 10% in just one month. This ability to pass on costs and widen the gap between raw material costs and selling prices—known as the 'spread'—is the direct engine for improved profitability in the second quarter.
Third, the supply situation from China is also helping. China has not only reduced its steel production but also reinstated export licensing on many steel products, creating administrative hurdles for exporters. This means there's less pressure from a flood of cheap Chinese steel, making the price hikes in Korea more sustainable. This external factor reinforces the effectiveness of the domestic policy shield.
These factors combined explain why the weak Q1 earnings, like Hyundai Steel's significant profit drop, are now being viewed as the cyclical bottom. The stage is set for a Q2 where improved spreads, supported by policy and a stable supply environment, drive a meaningful earnings recovery.
- Anti-dumping (AD) duties: Tariffs imposed by a country on imported products that it believes are priced below fair market value, or 'dumped,' to protect its domestic industries.
- Spread: In the steel industry, this typically refers to the difference between the selling price of steel products and the cost of raw materials like iron ore and coking coal. A wider spread means higher profitability.
- KTC (Korea Trade Commission): A government agency in South Korea responsible for investigating and ruling on unfair trade practices, including dumping and intellectual property infringement.