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POSCO Holdings: Initiation Of Coverage- A Powerful Lithium Recovery Story With Steel Margin Pressure Still In Focus!

POSCO Holdings reported consolidated revenue of KRW 17.9 trillion and operating profit of KRW 710 billion for the first quarter of 2026, indicating improvements in both areas compared to the previous quarter despite challenging macroeconomic conditions, including disruptions from the U.S.-Iran conflict that affected energy supply chains and led to volatile foreign exchange rates. The company highlighted sector-specific performance with mixed results across its core businesses. In rechargeable battery materials, rising lithium prices helped significantly reduce losses, particularly at POSCO Argentina, where production ramped up to around 70% utilization in March, resulting in the subsidiary’s first-ever monthly profit. The Argentina lithium plant is expected to achieve its first quarterly profit in the second quarter, supported by increased operating rates and expanded customer contracts such as a long-term supply deal with SK On. However, the lithium concentrate business faces uncertainty due to rising raw material costs, notably spodumene prices outpacing lithium prices, which could pressure margins.