POSCO Chemical, Surges 40% in a Month Despite Taking a Breather

Emerging as the Top Beneficiary of the US IRA
Completion of the World's Largest Anode Material Factory
The Only Domestic Company Producing Both Anode and Cathode Materials

[Image source=UPI Yonhap News]

[Asia Economy Reporter Hwang Yoon-joo] Posco Chemical, considered the biggest beneficiary of the U.S. Inflation Reduction Act (IRA), saw its stock price surge 40% over the past month. This is attributed to rising demand for de-China supply chains, which is expected to increase cooperation requests not only for cathode materials but also for anode materials.

According to the Korea Exchange on the 17th, Posco Chemical's stock price rose from 160,000 KRW to 225,500 KRW, a 40.9% increase, over one month (October 14 to November 16) based on closing prices.

The reason the stock price increase stands out amid a sluggish stock market is because it is regarded as the biggest beneficiary of the ‘IRA’. Posco Chemical’s main product is the cathode material, a core component of electric vehicle batteries.

On the 10th, the company completed and officially started operating a cathode material plant in Gwangyang, Jeollanam-do, with an annual capacity of 90,000 tons. The Gwangyang cathode plant is the largest in the world and can produce batteries for about one million electric vehicles.

Since August, construction has begun on a cathode material plant in Canada with an annual capacity of 30,000 tons, scheduled for completion in the second half of 2024. Accordingly, by the end of 2025, it is expected to secure production capacity of 60,000 tons in the U.S. and 30,000 tons in Canada. This has led to a surge in stock price as Posco Chemical emerges as the top beneficiary of the electric vehicle IRA.

Posco Chemical is proving itself not only in stock price but also in performance. Its third-quarter sales increased by 108.6% year-on-year to 1.0533 trillion KRW, and operating profit rose 159.9% to 81.8 billion KRW. Both sales and operating profit significantly exceeded consensus estimates. Notably, sales surpassed 1 trillion KRW for the first time ever, marking the highest sales for nine consecutive quarters.

Anna Lee, a researcher at Yuanta Securities, analyzed, "Posco Chemical’s 2023 sales are expected to reach 5.8 trillion KRW, representing a 66% growth compared to this year, mainly driven by cathode materials."

Posco Chemical’s status as a large corporation affiliated with Posco that also produces anode materials is another attractive point for investors. As the de-China supply chain structure strengthens, cooperation demands related to anode materials are expected to grow following cathode materials. Its unique position as the only company in Korea producing both cathode and anode materials appears to have stimulated investor sentiment.

The researcher added, "Starting mass production of artificial graphite in 2023, expansion of orders and growth in the anode materials sector are expected. Posco Chemical, which holds the most critical cathode and anode products in the de-China supply chain, will continue to benefit."