By Kwanwoo Jun


South Korean steel stocks rallied in morning trade, led by KG Dongbu Steel Co., as solid economic growth data out of China fueled hopes of stronger steel demand.

Shares of steel-plate maker KG Dongbu, an affiliate of the KG Group conglomerate, rose as much as 22% to 13,860 won ($10.50) early on Wednesday, outperforming the benchmark Kospi's 0.2% gain. That puts the stock on course for its biggest daily percentage gain in a year.

KG Dongbu led the surge among local steel makers, with Dongkuk Steel Mill Co. and Posco Holdings Inc. up 2.7% and 0.2%, respectively, in early trade.

The rally followed official data from China on Tuesday showing that its economy grew 4.5% on year in the first three months of the year. That is the fastest pace of expansion since the first quarter of 2022, indicating a solid post-pandemic recovery for the country.

Despite the solid GDP numbers, March data showed that China's long-struggling property sector--an indicator of steel demand--was still facing challenges, with new construction starts by developers contracting further.

Some market analysts still bet that China's post-Covid reopening and lifting of pandemic curbs will lead to a slow but sure recovery in steel demand. Seoul-based Hana Securities analysts S.B. Park said in a recent research note that steel demand from China could start picking up toward the end of 2023 and into the first half of 2024.


Write to Kwanwoo Jun at kwanwoo.jun@wsj.com


(END) Dow Jones Newswires

04-18-23 2328ET