As the Korea-U.S. trade negotiations have been concluded, details of the negotiations have been unveiled, and the stock price trends of key items within the liquefied natural gas (LNG) value chain are showing significant divergence.
While shipbuilding stocks, supported by policy momentum like the 'shipbuilding industry cooperation fund', continue to strengthen, those related to steel pipes, which had surged on expectations of the Alaska LNG project, are falling. The fact that related projects were not mentioned in the negotiations seems to suggest that the conclusion of the negotiations is being interpreted as a material exhaustion.
Experts analyzed that whether additional momentum related to LNG will emerge from the upcoming Korea-U.S. summit will be a variable determining the stock price direction of related companies.
According to the presidential office on the 31st, our negotiation team has agreed to import U.S. energy, including liquefied natural gas (LNG), worth $100 billion (approximately 139 trillion won) over the next three years during tariff negotiations with the U.S. Just like the European Union (EU), we promised to purchase U.S. energy and reduced reciprocal tariffs to 15%.
Despite news that imports of LNG from the U.S. will increase and strengthen related cooperation, the stock price trends in the LNG sector are diverging.
The stock price of shipbuilding companies is gaining additional upward momentum. This is due to the growing expectation that domestic shipbuilders will continue to secure large-scale vessel orders as demand for LNG carriers increases. Domestic large shipbuilders hold a monopolistic position in the global LNG carrier market, with LNG carriers being high-value vessels that require advanced technology, making them a core focus for the domestic shipbuilding industry.
On that morning, shipbuilding stocks such as HD Hyundai Heavy Industries (6.58%), HD Hyundai Mipo (3.66%), and HD Korea Shipbuilding & Offshore Engineering (2.12%) are rising sharply. Hanwha Ocean saw a surge of over 10%, hitting a record high for the year. In a situation where the U.S. is struggling to find appropriate alternatives for its shipbuilding industry revitalization outside of Korea, expectations are growing that cooperation in the shipbuilding sector between the two countries will accelerate.
In particular, the 'shipbuilding industry cooperation fund' included in the Korea-U.S. agreement is acting as an additional favorable factor. On that morning, the Korean negotiation team promised $350 billion in investments to the U.S., of which $150 billion is expected to be allocated to a shipbuilding-specialized fund.
Kim Yong-bum, head of the presidential office's policy office, stated, "The most notable point in this agreement is the decision to expand cooperation in the shipbuilding sector with the U.S." He added, "The $150 billion Korea-U.S. shipbuilding cooperation fund encompasses the entire ecosystem of the shipbuilding industry, including ship construction, maintenance, repair, and operations (MRO), and shipbuilding materials."
However, while they belong to the same LNG value chain, profit-taking is occurring in stocks that do not have additional favorable factors. Even before the trade negotiations were concluded, positive news such as the introduction of U.S. LNG and strengthening of the energy supply chain had already been reflected in the stock prices, and the conclusion of the negotiations is being interpreted as, in effect, a 'material exhaustion'.
Korea Gas Corporation, which is often mentioned as a key beneficiary of LNG, has seen its stock price fall by more than 4% on that day. Given that Korea Gas Corporation imports LNG from overseas gas production sites and monopolizes supply to domestic city gas companies, there were high expectations regarding the increase in U.S. LNG imports.
The sector showing the greatest selling pressure is the steel pipe sector. Although it is also significantly influenced by the Alaska LNG project within the LNG value chain, there was no mention of the Alaska LNG project in this negotiation.
Earlier, Japan decided to invest in the Alaska LNG project in the form of a joint venture rather than directly importing U.S. energy. The market had originally expected that Korea would participate in the Alaska LNG project in a similar manner.
In particular, predictions indicate that low-temperature shock-resistant steel pipes that can withstand Alaska's extreme low temperatures will be essential infrastructure beneficiaries. However, the negotiations only included discussions on direct energy imports, causing confusion among investors. Moreover, a 50% tariff on items such as steel and aluminum will remain unchanged.
On that morning, stocks of Dong Yang Steel Pipe (-11.03%) and HISTEEL (-12.81%), specialized steel pipe companies, saw double-digit declines. Following this, disappointment in stocks such as NEXTEEL (-9.68%) and SeAH Steel (-7.89%) is also evident.
Hyundai Motor Securities noted, "As 27% of Korea's steel pipe production is exported to the U.S., if Korea participates in the development of U.S. LNG, the investment sentiment towards the domestic steel pipe sector may improve."
A researcher in the transportation and shipbuilding sector stated, "There are still no specific details emerging beyond what the official delegation announced, making it difficult for corporations to grasp the specific contents properly. We need to confirm whether there will be additional policy momentum through the Korea-U.S. summit and follow-up consultations scheduled in two weeks."