On top of recovery in global demand, Korean steelmakers’ bottom line will be further helped by hike in prices of automotive steel plates supplied to domestic automakers.

Hyundai Steel Co. became the second after Posco to bump up the selling prices for its steel that goes into car frames. It agreed with its primary clients Hyundai Motor Co. and Kia Motors Corp. to raise the automobile steel plate price by 60,000 won ($53.5) per ton. The price adjustment applied retroactively from May supplies will likely be reflected in the bottom lines of steel vendors and automakers from the second quarter.

Hyundai Steel’s annual turnout of 5 million tons of auto steel plates goes entirely to the two carmakers.

As of 2:00 p.m. shares of Hyundai Steel were flat at 58,600 won ($50.7).

Posco earlier this year settled with Renault Samsung and GM Korea to raise steel prices by around 10 percent per ton.

Korea’s second largest steelmaker had earlier asked for a 100,000 won increase per ton to reflect the rebound in international commodity prices. In January during an investor relation (IR) session, Hyundai Steel’s senior executive vice president Kim Young-hwan argued that a hike to around 130,000 won per ton was necessary to keep up profitability from selling automotive steel plates. Its sister companies have pleaded to keep the hike moderate citing sluggish car sales.

Shares of Hyundai Motor and Kia Motors suffered as higher production cost would further dent their income statement on top of lackluster sales performance. Shares of Hyundai Motor were down 1.5 percent at 163,000 won and those of Kia Motors down 1.1 percent at 39,100 won.

Assuming commodity import prices plateau, the higher rates would help Hyundai Steel achieve an operating profit of 225 billion won for this year, said Bang Min-jin, an analyst at Eugene Investment & Securities Co.

By Moon Ji-woong

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