Posco Holdings Leads Steelmakers' Rally
By Kwanwoo Jun
Posco Holdings' shares led the broad rally in South Korean steelmakers Wednesday amid growing hopes that steel demand could bottom out later in the year.
The South Korean steelmaking giant's shares rose as much as 5.4% to 410,500 won ($323.74) in early trade, on course for their sharpest daily percentage gain in two months.
The benchmark Kospi was last 0.1% lower.
Nomura said in a recent research report that the auto and machinery sectors are signaling that steel demand may bottom out in the second half of 2023, which should help Posco Holdings' profitability improve into 2024. The Japanese investment bank upgraded its rating on the stock to buy from neutral and raises its target price by 71% to KRW480,000.
Earlier this week, Eugene Investment & Securities analyst Lee Eu-gene said in a research note that Posco Holdings--unlike its local steelmaking peers--is well-equipped to grow its bottomline with an additional future-growth engine--the lithium business. She viewed the company's promising EV battery-material business as a new catalyst for boosting its valuation.
Posco Holdings said Tuesday that it broke ground to build a factory in South Korea by 2025 to produce 25,000 tons of lithium hydroxide annually for electric-vehicle batteries. It added that it plans to use lithium carbonate from its own salt-lake plant in Argentina for the South Korean production.
Posco Holdings aims to become a leading global lithium producer with an annual output capacity of 300,000 metric tons by 2030.
Write to Kwanwoo Jun at kwanwoo.jun@wsj.com
(END) Dow Jones Newswires
June 13, 2023 22:44 ET (02:44 GMT)
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