SeAH Besteel Holdings, which produces specialty steel, is transforming from a steel stock into a space and aviation stock. As word spreads that the specialty steel SeAH Besteel Holdings makes is a high value-added product used to build rockets and satellites or construct nuclear power plants, its share price has surged and the company is being reappraised.
SeAH Besteel Holdings is a pure holding company for SeAH Besteel, SeAH Changwon Integrated Special Steel, and SeAH Aerospace and Defense, which produce specialty steel.
The company's products do not compete with cheap Chinese-made goods flooding the steel market, and as tensions between the United States and China intensify, SeAH Changwon Integrated Special Steel's special alloy plant in Texas, SeAH Super Alloy Technologies (SST), is nearing completion. News that SpaceX, led by Elon Musk and presumed to be a key customer, will soon pursue an initial public offering (IPO) also sharply lifted SeAH Besteel's share price.
This month, SeAH Besteel Holdings' share price has soared. As recently as early this month, the stock was around 28,000 won, but on the 12th it climbed to near 45,000 won.
Until not long ago, SeAH Besteel Holdings was a "heavy steel stock" whose share price rarely rose. For the past 10 years, the stock had been stuck in a long-term box range, barely breaking out of the 20,000–30,000 won band. After the COVID-19 pandemic, when the domestic stock market surged, the price topped 60,000 won in 2011, but only briefly.
But things changed this year. In April, the share price fell below 15,000 won, then rebounded sharply and jumped this month to top 40,000 won. As a result, the gap between SeAH Besteel's stock and the KRX Steel Index widened significantly. Since the start of the year, the KRX Steel Index has risen 49%, while SeAH Besteel Holdings' share price has surged 126% over the same period.
The recent rally was largely driven by news that SST's main client is SpaceX, the space corporation led by Elon Musk. SST in Texas has a specialty steel production capacity of 6,000 tons. That is not large by conventional steel output standards, but it involves high value-added special alloys used in space and aviation, and if supplied, profitability is expected to improve.
Investors, in particular, are focusing on the fact that SeAH Besteel Holdings' products are used not in general industrial goods such as autos, construction heavy equipment, and industrial machinery, but in space and aviation, which must withstand extreme environments.
In the industry, the view is that SeAH Besteel Holdings' strategy of focusing on high value-added products to compete with Chinese companies that mass-produce low-priced goods is finally paying off. A SeAH Besteel Holdings official said, "In the unfavorable environment of the steel industry, including oversupply, we focused on producing high value-added materials based on the technology we have built up over a long time to secure competitiveness."
This is also why the company established SST in Texas through large-scale investment. Texas is home to many specialized space, aviation, and defense companies, including NASA and Blue Origin, the space exploration company founded by Amazon founder Jeff Bezos. SST was built to win these companies, which use top-quality steel, as customers.
The official added, "To compete in the high value-added steel market, we plan to pursue networking and marketing with U.S. space and defense companies on the ground," noting, "Most of SST's corporate C-level executives are Americans."
SeAH Besteel Holdings is also working domestically on materials development with Korea Aerospace Industries (KAI) and Hanwha Aerospace, which have strong demand for high value-added steel.