Yuanta Securities Korea said on the 15th that SeAH Steel, the largest domestic steel pipe (pipes made of iron) corporations, is facing difficulties due to intensifying competition and worsening export conditions, and that it will take time.
Yuanta Securities Korea initiated coverage on SeAH Steel with a "neutral" investment opinion and a target price of 130,000 won. That is about 3% lower than SeAH Steel's previous session closing price (134,100 won).
SeAH Steel can produce 1.6 million tons (t) of steel pipes annually. Of these, demand for structural steel pipes and pipe steel pipes is closely related to domestic construction conditions, this researcher explained. The researcher said, "Since 2022, demand for construction-bound (steel pipe) has been sluggish, which is having a negative impact on SeAH Steel's sales."
It is also a burden for SeAH Steel that domestic steel pipe manufacturers have expanded their production capacity. In 2023, NEXTEEL completed an expansion of 26-inch large-diameter ERW facilities with an annual capacity of 350,000 t in Gyeongju, North Gyeongsang. This year, in addition to NEXTEEL, Husteel also completed facility investments using the submerged arc welding (Submerged Arc Welding) process and plans to begin full-scale operations from 2026.
Exports also have not provided a breakthrough as the United States imposed a 50% tariff on imported steel products. The researcher said, "When a 25% tariff was imposed in Mar. this year, SeAH Steel had more expectations for increased volumes due to the lifting of quotas than concerns about negative impacts, but while local demand has recently slowed, the tariff was raised to 50%, which appears to be causing significant disruptions to exports."
The researcher analyzed that, considering the burden of materials and supplies prices and other factors, SeAH Steel's operating margin could fall to 2%–3% in the second half of this year. Even if some of the expense is passed on through price increases via negotiations with customers, the 2026 operating margin was estimated at the 4%–5% level.
However, the researcher said, "We judge that, rather than the issues surrounding SeAH Steel deteriorating further, there is room for improvement to be seen going forward, so the stock price may show downside rigidity."