POSCO's 5.3% Plunge: What's Brewing in the Steel Sector?

Summary
• POSCO (PKX) trades at $51.73, down -5.325% from its $54.64 previous close
• Intraday range spans $51.16 to $52.19 amid sector-wide selloff
• Arcelormittal (MT) declines -2.42%, signaling synchronized steel sector pain
• VanEck Steel ETF (SLX) lags broader market with -0.70526% drop

Today’s sharp selloff in POSCO reflects a perfect storm of U.S.-Canada tariff escalations, weakening global demand, and technical exhaustion. The stock’s 52-week high of $74.01 feels increasingly distant as trade policy uncertainty and structural demand shifts test critical support levels.

Tariff Escalation and Demand Deterioration Fuel the Selloff
The immediate catalyst for PKX’s 5.3% drop stems from the U.S. Coated Steel Trade Case escalation and Trump’s 35% tariff announcement on Canadian imports. These developments amplify global steel trade uncertainty, directly impacting POSCO’s export-dependent business model. Concurrently, the SMU Steel Demand Index at 42—well below its four-year high of 65.0—confirms weakening demand fundamentals. European steelmakers’ warnings about pricing pressures and U.S.-EU tariff negotiations further cloud the outlook, creating a bearish feedback loop for steel equities.

Steel Sector in Retreat: MT’s -2.42% Drag Reflects Broader Industry Pain
The steel sector is experiencing synchronized weakness, with Arcelormittal (MT) down -2.42% as trade policy risks and soft demand converge. POSCO’s -5.325% drop outpaces its peer’s decline, suggesting additional pressure from its exposure to U.S. and Canadian markets. The VanEck Steel ETF (SLX) also lags the broader market, down -0.70526%, underscoring leveraged steel investors’ caution. This sector-wide correction reflects a structural shift in global steel trade dynamics rather than company-specific issues.

Bearish Technicals and Volatility-Driven Options Playbook
• 200-day average: $49.57 (above) | RSI: 38.63 (oversold) | MACD: 1.51 (bearish divergence) | Bollinger Bands: $53.798 (lower band) | Turnover rate: 0.02913103% (thin liquidity)
• Key levels to monitor include the 200D MA ($49.57) and the 52-week low ($39.4). The VanEck Steel ETF (SLX) offers leveraged exposure but trails the broader selloff.
• Top Call Option: PKX20250919C55 (strike $55, exp 09/19) | IV: 35.49% (moderate) | Delta: 0.150 | Theta: -0.0202 | Gamma: 0.034357 | Turnover: 50
• Top Put Option: PKX20250919P50 (strike $50, exp 09/19) | IV: 23.33% (low) | Delta: -0.314 | Theta: -0.004898 | Gamma: 0.079425 | Turnover: 0
• The PKX20250919C55 call, though out-of-the-money, offers high leverage (103.42%) and gamma sensitivity for a potential rebound. A 5% downside to $49.13 would yield a max loss, but the low theta decay makes it a speculative bet. The PKX20250919P50 put, with 54.43% leverage and 7.94% gamma, is a safer short-term play against the 200D MA breakdown. Aggressive short-sellers should consider PKX20250919P50 into a test of the $50 support level.
• Payoff estimation: At a 5% downside to $49.13, the put’s max gain is $0.87 (K - ST = 50 - 49.13). The call’s max loss is $0.87 (ST - K = 49.13 - 55).
If $49.57 breaks, PKX20250919P50 offers short-side potential. Aggressive bulls may consider PKX20250919C55 into a bounce above $52.19.

Backtest POSCO Stock Performance
The backtest of PKX's performance after an intraday plunge of -5% shows mixed results over different time frames. While the 3-day win rate is 50.41%, the 10-day win rate is slightly higher at 50.89%, and the 30-day win rate is 49.59%, indicating a moderate likelihood of positive returns in the short to medium term. The maximum return during the backtest period was 3.41%, which occurred on day 59, suggesting that while there is a chance of recovery, the gains are not consistently high.

Steel Sector at Inflection Point: Position for a Volatile Finish to 2025
The current selloff in POSCO and the broader steel sector reflects a confluence of trade policy uncertainty, soft demand, and technical exhaustion. Key levels to monitor include the 200D MA ($49.57) and the 52-week low ($39.4). Arcelormittal’s -2.42% decline underscores sector-wide vulnerability, while the VanEck Steel ETF (SLX) remains a barometer for leveraged steel exposure. Investors should prioritize short-term put options like PKX20250919P50 or pivot to defensive positions as the U.S.-Canada tariff deadline (Aug 1) looms. For now, the path of least resistance appears bearish, but a rebound above $52.19 could reignite multi-month volatility.