[Click eStock] "Posco Chemical, Must Watch in 2023"

LG Chem·GM Joint Venture Expected to Secure Large Volume of Cathode Material Orders
North America Investment Plan May Be Announced Within This Year

[Asia Economy Reporter Minwoo Lee] POSCO Chemical is expected to achieve performance in the third quarter of this year similar to the previous quarter. It is evaluated that the rise in raw material prices offset the decrease in cathode material demand. There is an analysis that attention should be paid to 2023, when supplies to the joint venture between LG Chem and General Motors (GM) in the United States will begin in earnest.

On the 18th, IBK Investment & Securities maintained a target price of 190,000 KRW and a 'Buy' investment rating for POSCO Chemical based on this background. The closing price on the previous trading day was 162,000 KRW.

For the third quarter of this year, consolidated sales of 486 billion KRW and operating profit of 35 billion KRW are expected. This represents increases of 25% and 83%, respectively, compared to the same period last year. It is expected that there will be little change compared to the previous quarter. IBK Investment & Securities researcher Changhyun Jeon explained, "Cathode materials saw some decrease in electric vehicle (EV) demand due to the shortage of automotive semiconductors, but the rise in raw material prices led to higher selling prices, offsetting this. Anode materials continued to show a sluggish trend in the third quarter following the second quarter."

He emphasized the need to focus on the large-scale supply that will begin in earnest from 2023. Researcher Jeon said, "The NCMA (Nickel-Cobalt-Manganese-Aluminum) cathode materials required for the first plant of 'Ultium Cells,' the joint venture between LG Chem and GM, are estimated at an annual scale of 50,000 tons, most of which POSCO Chemical is expected to supply in earnest from 2023. Accordingly, sales growth and profit margin improvement due to operating leverage effects are anticipated, and POSCO Chemical is likely to be a major supplier for the second plant, scheduled for completion at the end of 2023."

There is a forecast that North American investment plans may become visible in the second half of the year aiming for mass production as early as the second half of 2023, with investment plans likely to be announced within the second half. Researcher Jeon analyzed, "POSCO Chemical's cathode material production capacity is expected to expand from 40,000 tons this year to 275,000 tons by 2025, and anode materials from 70,000 tons this year to 170,000 tons by 2025. The synergy effects with the parent company's raw material business (lithium, nickel) and recycling business (joint venture with Huayou Cobalt) will also begin in earnest after 2023."