POSCO Getting Less Than Its Due, But Conditions Remain Weak

South Korea’s POSCO (PKX) has perked up some in recent months, following an overall upward trend in many steel names that seems underpinned by the assumption that the worst is past for the steel industry. I have written previously that I find that viewpoint somewhat optimistic, as I think there is still room for demand (and by extension, prices) to disappoint in 2020 and cost relief may not be as great as investors hope.

When it comes to POSCO, though I do think the company could bump along the bottom for a little longer (a few quarters), I do think the company is going through the worst of the cycle. What’s more, I think POSCO has been sold off too far relative to its underlying quality. While I’d probably rather have ArcelorMittal’s (MT) customer base, I’d rather have POSCO’s business on the whole for the next cycle. As one of the cheaper names in the steel space that I follow, I think this one could have some appeal now for investors who feel like fishing near the bottom.

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POSCO Getting Less Than Its Due, But Conditions Remain Weak