"Steel Stocks Heat Up Again"...Core Business and New Ventures Drive a Double Boost

[Financial News] Steel stocks are showing broad strength from the first trading day of September. Expectations for a recovery in the core steel business are growing, while the growth potential of new ventures such as lithium and specialty alloys is also drawing attention, lifting investor sentiment across the sector.
As of 10:10 a.m. on the 1st, POSCO Holdings Inc. was trading at 347,500 won, up 2.66% from the previous session. SeAH Besteel Holdings rose 1.71% to 41,700 won, and Hyundai Steel Company gained 1.48% to 30,850 won. SeAH Steel also advanced 0.58% to 139,800 won.
Brokerages are also backing the view that the steel industry is passing through its bottom. Anti-dumping duties and minimum import price systems on hot-rolled and heavy plate steel from China and Japan are pushing up the prices of imported products, helping support the floor for domestic steel prices. With raw material costs also stabilizing, analysts say conditions are improving for profitability in the second half.
Eugene Investment & Securities forecast that the spread for blast furnace makers in the second half will widen by 50,000 won per ton from the first half to around 500,000 won. As a result, profits at blast furnace producers such as POSCO Holdings Inc. and Hyundai Steel Company are expected to improve in the latter half of the year.
Steelmakers are also reshaping their business portfolios accordingly. They are reducing their share of commodity products, increasing high value-added steel, and reallocating cash generated from steel into businesses with stronger growth potential. In particular, lithium and specialty alloys are drawing attention as new profit sources because they offer stronger pricing power and higher barriers to entry than steel.
For POSCO Holdings Inc., the lithium business is emerging as a key driver of a revaluation. The company plans to invest 5.5 trillion won in its lithium business through 2028. Once utilization and recovery rates stabilize, its Argentina salt-lake lithium project is expected to lower long-term total costs to about $10,000 per ton. Even if lithium prices are assumed at $20,000 per ton, an operating margin of 50% is possible, analysts said. The value of the Argentina salt-lake lithium project in 2030 was estimated at about 8 trillion won.
SeAH Besteel Holdings is seeing improvements in its core business alongside an expansion in its specialty alloy operations. If anti-dumping measures are imposed on Chinese special steel bars, the price competitiveness of Chinese products, which account for about 30% of the domestic market, would weaken, potentially shifting demand toward local products. For SeAH Besteel and SeAH Changwon Special Steel, that could mean both higher sales volumes and better pricing.
SeAH Besteel Holdings is also developing specialty alloys for aviation, defense and space as a new growth engine. SST, its U.S. specialty alloy manufacturing subsidiary, completed construction of its plant in June and is now working on equipment installation and customer certification. Meaningful earnings contributions are expected to become visible starting next year.
Kim So-jeong, an analyst at Eugene Investment & Securities, said, "Investors should focus on companies that defend profitability in their core business and reinvest the cash generated there into high-return growth businesses." She added, "POSCO Holdings Inc. and SeAH Besteel Holdings are expanding their share of high value-added steel to protect core profitability, and they are investing a significant portion of the cash generated from their core businesses into new ventures."

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