Steel pays the bills, while lithium hits a milestone
- Steel remains the center of the company, but a June 2025 US tariff hike to 50% increases the urgency for local production.
- Battery materials face a harsh shock after the US ended consumer EV tax credits starting October 2025.
- The Argentina lithium brine operation achieved its first ever quarterly profit in Q2 2026.
- Hard rock lithium margins are shrinking because raw spodumene costs consume roughly 70% of the cost structure.
- POSCO plans to launch LFP cathode materials commercially by early next year.
Old steel meets new borders
POSCO Holdings is moving fast to protect its two core businesses. In steel, the company is building a US electric arc furnace with Hyundai Motor Group to dodge global protectionism. This push became urgent after a June 2025 US tariff hike on steel imports to 50% and the looming 2027 USMCA melted and poured rules.
The second engine is rechargeable battery materials. POSCO wants to sell 50,000 tons of lithium this year. The company is securing resources like lithium and nickel to build a long term supply chain for electric vehicles, and recently achieved a major milestone with its Argentina lithium business turning a quarterly profit.
However, the bear case is getting stronger. The July 2025 OBBBA legislation eliminated consumer EV tax credits in the US starting October 2025. This threatens end market demand for POSCO battery materials. At the same time, the hard rock lithium business is suffering a margin squeeze because spodumene input costs are rising faster than recovering lithium hydroxide prices.
This is a company in a hard transition. Steel pays the bills, but it requires new factories to survive trade walls. Battery materials are showing early profitability, but POSCO must survive a severe downturn in electric vehicle demand.
How POSCO makes money
POSCO makes most of its money by producing and selling steel, then moving goods through trading and infrastructure units. Steel earnings depend on the spread between selling prices and raw material costs. To protect profit, the company is shedding weak assets, like its recent sale of the unprofitable PZSS plant in China.
Infrastructure adds trading, construction, logistics, power, and natural resources work. This makes POSCO more than a steel mill, but it also ties the company to global trade, construction cycles, and energy prices.
Battery materials are the big reinvestment area. POSCO Future M sells cathode and anode materials. The logic is simple. If automakers need secure battery supply chains, POSCO wants to own the raw material and processing steps.
Where it breaks is timing and policy. Building mines and chemical plants requires massive cash before they earn money. With the US eliminating key consumer EV tax credits, the battery materials plan could hurt profits instead of helping them if automaker demand plummets.
What POSCO sells
Steel products
POSCO sells hot rolled, cold rolled, plate, stainless, wire rod, and silicon steel products. This is still the core profit engine.
Automotive steel
Automotive steel links POSCO to carmakers like Hyundai. The planned US plant is meant to protect this supply chain under stricter trade rules.
Lithium hydroxide
Lithium hydroxide is used in EV batteries. POSCO is ramping Pilbara and Argentina supply, targeting 50,000 tons of sales this year.
Cathode materials
POSCO Future M makes cathode materials, including high nickel cathodes for longer range electric vehicles and upcoming LFP materials.
Anode materials
POSCO sells artificial and natural graphite anode materials. The line is tied directly to battery demand.
Infrastructure and energy
POSCO International, POSCO E&C, and related units handle trading, construction, logistics, power, and natural gas.
Historical revenue mix
The mix uses 2024 external segment revenue from POSCO Form 20-F, before consolidation adjustments. Steel and infrastructure still dominate the company.
What could go wrong
US ends consumer EV tax credits
High impact · High oddsThe July 2025 OBBBA legislation eliminated consumer facing EV tax credits for vehicles acquired after September 2025. This demand shock could severely reduce orders for POSCO rechargeable battery products.
Spodumene costs eat lithium margins
High impact · High oddsThe hard rock lithium business is seeing input costs rise faster than lithium hydroxide prices. Management noted spodumene costs now account for roughly 70% of the cost structure, making profitability near impossible at current prices.
US localization costs and execution
Medium impact · Medium oddsThe USMCA melted and poured rule and the 50% tariff hike push POSCO toward local US steelmaking with Hyundai. A new plant requires massive capital, and cost overruns could dilute the benefit of avoiding tariffs.
In one breath
Is POSCO Holdings mainly a steel company or a battery company?
It is still mainly a steel and infrastructure company. Battery materials are the growth plan, but steel and trading are much larger today.
Why is POSCO building steel capacity in the United States?
North American trade rules are getting stricter. The US raised steel import tariffs to 50% in June 2025, and the USMCA rule requires auto steel to be made in the region by 2027.
What is the key lithium risk for POSCO?
The key risk is execution and margin spread. The company needs lithium hydroxide prices to recover faster than spodumene input costs to reach profitability in hard rock operations.
