Steel stocks climbed on their own on the 15th as South Korea's market leaders plunged in premarket trading, hit by an inflation shock from the U.S. and concerns that artificial intelligence capital spending may not pay off. Analysts attributed the move to a combination of energy infrastructure investment and the effect of anti-dumping duties on imported steel, along with buying interest in undervalued defensive stocks amid a severe selloff in technology shares.
Daehan Steel (084010) jumped about 12% in premarket trading, according to Nextrade data on the 15th. Dongkuk Steel (460860) and TCC Steel (002710) rose about 2.9% and 2.7%, respectively, while Kiswire (002240) gained about 2%, with the strength spreading across small- and mid-cap and traditional steel names.
The across-the-board gains reflected expectations that the industry has passed its trough, helped by expanding energy infrastructure and trade remedy measures. Comments from the White House on investment in an Alaska liquefied natural gas (LNG) development project raised hopes for demand for steel pipe and structural steel, acting as a catalyst. Provisional anti-dumping duties on Chinese and Japanese hot-rolled coil and heavy plate have also slowed inflows of low-priced imports, putting a floor under domestic steel prices. Analysts said a prolonged share price correction has pushed price-to-book ratios (PBR) to historic lows, providing valuation support on the downside.
The steel sector's performance contrasted with the sharp declines in large technology stocks weighing on the Korean market. In premarket trading, Samsung Electronics (005930) fell about 6% to the 210,000-won range, while SK hynix (000660) dropped about 8% and risked breaking below the 1.3 million-won level. SK Square, the holding company, and Samsung Electro-Mechanics, the leading components maker, were each down about 7%.
Analysts said the declines amounted to panic selling beyond profit-taking, triggered by a shock high-yield bond issue from U.S. AI cloud provider CoreWeave, a warning from Gartner about impairment of AI investment assets, and a higher-than-expected U.S. consumer price index (CPI) reading for September. Brokerage analysts said the collapse of market leaders could keep a niche rotation going for some time into low-PBR value stocks such as steel, where prices look attractive. One brokerage analyst said that in a phase combining prolonged high rates at the macro level with doubts about returns on Big Tech investment, deeply discounted value stocks and sectors backed by real demand would emerge as alternatives.
