DEEP RESEARCH · New Space Materials

The Economics of Reaching Orbit — ATI, SeAH Besteel Holdings, Sphere Corp & Carpenter Tech inside the Starship / Raptor supply chain

Material strategy in the New Space supply chain and a competitive assessment of the four leading players — technical moat and valuation justification

Written: 2025-12-14 · Published: 2025-12-15 · Lens: aerospace specialty-alloy value chain · Source: Naver blog original

0. Bottom line first

• ATI (Core) — vertically integrated isothermal forging + powder metallurgy. A&D = 70% of revenue ($793M in 3Q25). Overweight.
• SeAH Besteel Holdings (Value) — Texas Temple SST plant ($110M / 6,000 t per year, online 2026) secures "Made in USA" status. Buy.
• Sphere Corp / formerly HVM (Growth) — $1.05B long-term supply agreement with SpaceX through 2035. Satellite position.
• Carpenter Tech (Hold) — SAO operating margin 32.0% (above ATI HPMC 24.2%), but its premium positioning sits in mild tension with SpaceX's cost-down ethos.

Interpretation: A barbell strategy — ATI + SeAH Besteel as the core, Sphere Corp as the alpha — looks like the most rational construction today.

1. Introduction — the New Space material paradigm shift

1.1 Reusability and cost-efficiency rewrite the material spec

The global aerospace industry has shifted abruptly from government-led "Old Space" to commercial "New Space." The core driver is SpaceX's pursuit of reusability and cost-efficiency. As launch vehicles evolve from one-shot consumables to aircraft-like vehicles flown dozens of times, the demands on materials change fundamentally.

Official fact: The legacy aluminum-lithium lightweighting strategy is being replaced — for very large vehicles like Starship — by a combination of stainless steel + nickel-based superalloys.

Interpretation: Materials must now survive thousands of degrees at reentry, stay ductile in cryogenic methane/oxygen, and tolerate repeated flight — so plain steel mills must be re-rated as "extreme-environment engineering materials" firms.

1.2 Scope of analysis

• US incumbent: ATI (Allegheny Technologies)
• Korean steelmaker pivoting to specialty: SeAH Besteel Holdings (SeAH CSS)
• KOSDAQ challenger: Sphere Corp (formerly HVM, 295310.KS)
• Premium benchmark: Carpenter Technology (CRS)

2. Anatomizing the Starship / Raptor bill of materials

To form an investment view you have to understand the technical difficulty and the barriers to entry SpaceX imposes. Starship splits into Hull and Engine — two very different supply-chain logics.

2.1 Hull — the renaissance of 300-series stainless

• Specification: Primarily 304L (low-carbon) stainless; SpaceX uses its in-house cold-rolled "30X" variant. The alloy combines cryogenic toughness with high-temperature strength.
• Supply dynamics: A volume game. Outokumpu (Finland) supplies coil from its Calvert, Alabama mill.
• Implication for investors: ATI exited the Standard Stainless Sheet business in 2021. ATI is not a Hull competitor — investors must classify ATI as an "engine materials" firm, not a "steel" firm.

2.2 Raptor engine — the metallurgical frontier

Official fact: Raptor uses a full-flow staged-combustion cycle (FFSC); chamber pressure exceeds 300 bar (~4,400 psi), and oxygen-rich hot gas drives the turbine.

• Core materials: Where ordinary metal would oxidize and burn away, you need single-crystal Ni superalloys (SX500 / SX300) and Inconel-family alloys.
• Manufacturing: Complex internal channels call for additive manufacturing (3D printing / AM) and isothermal forging.
• Supply dynamics: This is exactly where ATI, Carpenter Technology, Sphere Corp and SeAH CSS compete. The deciding factors are material purity and powder quality.

3. ATI (Allegheny Technologies) — the propulsion-system heavyweight

3.1 The strategic pivot

ATI shed its old diversified portfolio and transformed into a high-value-added materials house centered on aerospace & defense (A&D).

Official fact: In 3Q25, A&D revenue was a record $793M, or 70% of total revenue.

Interpretation: ATI is no longer a cyclical steel name — it is a core player in a structurally growing aerospace sector.

3.2 The moat — vertically integrated specialty processes

3.2.1 Powder metallurgy + additive manufacturing

• Capability: A large gas-atomization complex in Oakdale, PA, leading the Ni-superalloy powder market. The powder minimizes porosity in AM and produces a uniform microstructure — suitable for fatigue-critical components like rocket engines.
• SpaceX connection: ATI has demonstrated AM capability through contracts such as the one with Bechtel Plant Machinery — meeting the bar SpaceX expects of a "next-gen materials development partner."

3.2.2 Isothermal forging

• Capability: ATI's forging plant in Cudahy, Wisconsin houses the world's largest 12,500-ton isothermal press. Isothermal forging (die and workpiece heated to the same temperature) is the only way to precision-form hard-to-machine superalloys.
• Barrier to entry: Hundreds of millions in CAPEX and decades of operating know-how. A new entrant simply cannot catch up in a short time — a strong moat.

3.3 Financial health and valuation

• Profitability: The high-margin HPMC (High Performance Materials & Components) segment posted an EBITDA margin of 24.2% — up 190 bp YoY. This is pricing power, not just material supply.
• Cash flow / capital returns: ATI executed $150M of buybacks in 3Q25 and raised its annual FCF guidance — implying the heavy CAPEX cycle is largely behind it and the harvest phase is underway.

4. SeAH Besteel Holdings — penetrating the supply chain through localization

4.1 Holding company with a dual portfolio

SeAH Besteel Holdings splits cleanly into a Cash Cow — SeAH Besteel (carbon-alloy steel / automotive) — and a Growth Engine — SeAH CSS (Changwon Special Steel). Investor attention should be on the latter. SeAH CSS produces stainless wire rod, bar and seamless pipe, and has accumulated expertise in Ni alloys and titanium.

4.2 The game-changer — SeAH Superalloy Technologies (SST)

The strategy hinges on the specialty-alloy plant under construction in Temple, Texas.

• Investment scale: About $110M (~KRW 150 bn), targeting 6,000 t/year capacity.
• Location strategy: Temple is geographically close to SpaceX's Boca Chica launch site and the McGregor engine test stand — cutting logistics costs and enabling real-time collaboration with SpaceX engineers.
• Regulatory shield: The plant sidesteps "Buy American" rules and Section 232 tariffs, earns Made-in-USA status, and strengthens eligibility for defense and aerospace tenders.

4.3 Technical capability and certifications

• VOD / VAR processing: SeAH CSS runs Vacuum Oxygen Decarburization and Vacuum Arc Remelting lines to produce clean steel with extreme control of gas content and non-metallic inclusions — a prerequisite for aerospace alloys.
• SpaceX engagement: Negotiations on Ni / Cr / Ti specialty alloys for rockets and satellites have been ongoing since 2023. This is more than a possibility — it signals real partner status, particularly for intermediate-stage materials used in Raptor manifolds and structures.

5. Sphere Corp (formerly HVM) — the high-risk, high-reward niche player

5.1 An identity change

The former Hankook Vacuum Metallurgy (HVM) renamed itself Sphere Corp (295310.KS) and declared its leap, as a KOSDAQ-listed firm, to a global space-materials company. The rename is not pure branding — it signals an expansion from "vacuum metallurgy" into "space supply-chain solutions."

5.2 The billion-dollar jackpot — SpaceX long-term agreement

Official fact: In August 2025, Sphere Corp announced a long-term supply agreement with SpaceX worth $1.05B (~KRW 1.4 trillion) running through 2035.

• Scope: Supply of Ni-based superalloys and Ti alloys used in rocket engines, nozzles and combustion chambers.
• Revenue visibility: Confirmed 2026 volume of about $55M (~KRW 75 bn), with upside as Starship cadence rises.
• Technical implication: Sphere Corp's vacuum-melt technologies (VIM/VAR) cleared SpaceX's stringent quality bar — global Tier-1 recognition.

5.3 Risk factors

Interpretation: The contract is huge relative to current revenue, but Sphere Corp's capital base and capacity are small compared with ATI or SeAH Besteel. Whether CAPEX can scale in time to meet rising demand is the key question, and single-customer concentration on SpaceX cuts both ways.

6. Carpenter Technology (CRS) — the premium benchmark

6.1 Technical edge and margins

• Profitability: 1Q FY2026 SAO (Specialty Alloys Operations) operating margin: 32.0%, above ATI HPMC's 24.2%. Carpenter is exercising strong pricing power in deeper niches.
• Technical specialization: Dominant in high-strength landing-gear steel (AerMet® 100) and soft-magnetic alloys for avionics (Hiperco®).

6.2 Relationship with SpaceX

Carpenter does not publicly advertise its SpaceX relationship, but industry observers note its fastener-grade and high-temperature alloys are widely used. ATI dominates large forgings and powder; Carpenter dominates small precision parts and specialty functional alloys.

7. Comparison — SpaceX entry requirements and competitive matrix

7.1 Comparison matrix

8. Financial analysis and investment implications

8.1 ATI — balance of stability and growth (Core Holding)

ATI combines the Boeing/Airbus ramp (a reliable beta) with SpaceX as the alpha.

• Thesis: A steady 20%-handle EBITDA margin and active capital returns underpin downside protection, while rising jet-engine aftermarket (MRO) demand secures long-term cash flow. The most appropriate core portfolio asset for institutional investors.

8.2 SeAH Besteel Holdings — structural re-rating (Value Play)

Depressed by the steel downcycle, the stock is undervalued; the transformation into an aerospace materials company will be the re-rating trigger.

• Thesis: As the Texas plant approaches commissioning in 2026, the multiple can expand from traditional-manufacturer territory (P/E 5–6×) to specialty-materials territory (P/E 15×+). Medium-to-long-term accumulation makes sense.

8.3 Sphere Corp — high risk / high return (Growth Play)

SpaceX revenue concentration is so high that the stock will track the success of the Starship program.

• Thesis: Order book is enormous relative to market cap — if execution is proven, the upside is explosive. Volatility will be high around equity issuance or quality incidents.

9. Conclusion and recommendations

1. ATI — on the back of proven technology, owns the market for the hottest, fastest-spinning parts of the engine. As a beneficiary of the broader aerospace supercycle: Overweight.
2. SeAH Besteel Holdings — "strategic localization" is a brilliant move. The Texas plant collapses physical and psychological distance to SpaceX and positions the firm as a core supply-chain partner. With its valuation discount: Buy.
3. Sphere Corp — the highest pure-play SpaceX exposure available. Include as a satellite position to capture upside.
4. Carpenter Technology — best-in-class technology and margins, but the premium model sits in mild tension with SpaceX's cost-down drive. Moat is so strong that Hold is appropriate.

Bottom line: Investing in the SpaceX supply chain is no longer a thematic exercise — it requires selective, fundamentals- and technology-driven analysis. A barbell strategy of ATI + SeAH Besteel at the core, with Sphere Corp as alpha, looks like the most effective institutional construction at this point.