Korean steel stocks recorded a price-to-book ratio (PBR) of 0.39x as of July 14, the lowest among 17 KRX sector indices, according to Korea Exchange data. POSCO Holdings stood at 0.42x, Hyundai Steel at 0.18x, and SeAH Besteel Holdings at 0.56x - significantly below the global steel company average of 0.9x and market average of 1.8x compiled by Daishin Securities. The prolonged discount reflects a combination of China's production overcapacity and low-price exports, domestic construction market downturn, and low return on equity (ROE). Market expectations are emerging that the sector may pass its bottom as reduced Chinese low-price volumes, rising product prices, expanding AI infrastructure demand, and stabilizing raw material costs converge.
Steel Stocks Show Relative Resilience During Market Decline
This month, POSCO Holdings declined 4.3%, Hyundai Steel fell 6.6%, and SeAH Besteel Holdings dropped 12.8%. The stocks demonstrated relative resilience compared to the broader KOSPI index during the sharp market decline. Foreign investors net purchased POSCO Holdings and SeAH Besteel Holdings for 42.589 billion won and 3.343 billion won respectively this month, accumulating select positions in the sector.
Rebar Exports to US Surge 33-Fold Year-Over-Year
Domestic hot-rolled coil distribution prices reached 980,000 won per ton in the second week of July, up 1.0% from the previous week. First-half rebar exports to the US totaled 484,000 tons, approximately 33 times the year-earlier period. Securities firms anticipate that sales prices (P) will be supported by reduced Chinese low-price volumes and anti-dumping measures, while AI infrastructure-related exports will supplement sales volume (Q).
Raw Material Costs Expected to Decline in Second Half
Daishin Securities projects iron ore prices, which reached $111 per ton in May, will fall to $90-100 per ton in the second half. Australian coking coal, which traded at $220-240 per ton in the first half, is expected to decline to $180-210 per ton. Kang Min-ah, researcher at Daishin Securities, stated: "The steel industry is at the beginning of a turnaround phase. P and Q are showing clear improvement signals, while C is expected to stabilize in the second half after a temporary increase in the first half."
AI Infrastructure Emerges as New Demand Source
Semiconductor plants in the Honam region and power grid investments are identified as new demand sources. Park Sung-bong, researcher at Hana Securities, stated: "As AI data center construction, semiconductor production facility expansion, and supporting power infrastructure development are being pursued simultaneously, they are expected to act as factors expanding steel demand."
FAQ
What is the current PBR of Korean steel stocks?
As of July 14, the KRX Steel Index PBR stands at 0.39x, the lowest among 17 KRX sector indices. POSCO Holdings is at 0.42x, Hyundai Steel at 0.18x, and SeAH Besteel Holdings at 0.56x.
How much did rebar exports to the US increase in the first half?
First-half rebar exports to the US reached 484,000 tons, approximately 33 times the volume exported during the same period in the previous year.
