POSCO Holdings / POSCO (POHANG_PKX)

The appropriate current view of POSCO Holdings / POSCO is as a BBB+ / Baa1 -rated materials and steel group that remains investment grade but has clearly stepped down from the A-rating category. In direction, 1Q 2026 operating profit alone shows signs of improvement, but including the increase in net debt and capex, the near-term direction is flat to modestly cautious. The probability of a rapid change in credit level or direction is not high, but if renewed steel-margin deterioration, capex overshoot, losses in rechargeable battery materials and construction, and additional downgrades coincide, market assessment could move significantly within one to two years.

The supports are clear. POSCO has a core Korean and globally leading steel franchise, and the steel segment improved operating profit in 2025. POSCO International contributes to group diversification through energy and trading earnings and was also solid in 1Q 2026. Cash and short-term financial instruments are large, and domestic and international market access remains in place. These factors provide some resilience against short-term market weakness.

The constraints are equally clear. The consolidated operating margin declined to 2.6% in 2025, and profit attributable to owners of the parent narrowed to KRW 658.0 billion. Operating profit recovered in 1Q 2026, but net debt increased to KRW 15.364 trillion and net debt / equity rose to 24.2%. The 2026 capex plan of KRW 11.3 trillion is heavy and, as S&P noted, could exceed operating cash flow. The rating has already been lowered to BBB+ by S&P, and Moody’s has a Negative outlook.