Seoul: POSCO Holdings Inc., South Korea's leading steelmaker, announced a significant 85.5 percent drop in its second-quarter net profit, primarily due to steep U.S. tariffs and a decline in global demand.

According to Yonhap News Agency, the company's net profit for the three months ending June 30 fell to 80 billion won (US$57.6 million) from 550 billion won in the previous year, as reported in a regulatory filing. A company spokesperson attributed the decline in profits to U.S. tariffs, reduced demand for steel products, and rising protectionism in the global market.

The United States currently enforces a 50 percent item-by-item tariff on all steel and aluminum imports. Although South Korea recently negotiated a trade agreement with the U.S. that reduces tariffs on some imports, such as automobiles, from 25 percent to 15 percent, this agreement does not extend to steel and aluminum products. As part of the deal, South Korea has also committed to investing US$350 billion in the U.S.

Further compounding the issue, POSCO's operating profit dropped 18.7 percent to 610 billion won in the second quarter, down from 750 billion won a year earlier. Sales also saw a decline, falling 5.1 percent to 17.56 trillion won from 18.51 trillion won during the same period. The company spokesperson also noted that decreased equity gains from affiliates in rechargeable battery materials, such as POSCO Future M, negatively impacted earnings due to rising operating costs and a decline in lithium prices amidst the ongoing slowdown in the electric vehicle (EV) sector.

Amid these challenges, POSCO Holdings is considering the acquisition of Whyalla Steelworks, operated by Liberty Primary Steel in Australia. The acquisition is being evaluated for its strategic value, particularly its captive iron ore mines. A company official stated in an earnings conference call that although the Australian steel plant, with an annual production capacity of 1.2 million tons of steel bars and structural steel, offers limited business synergies with POSCO, its iron ore mines could be instrumental in advancing POSCO's low-carbon steelmaking initiatives.

For the first half of the year, POSCO reported a 63.5 percent decrease in net income, which fell to 420 billion won from 1.15 trillion won compared to the same period last year.