SSAB's Intellectual Property Offense: How Legal Triumphs Secure Premium Pricing and Dominance in Industrial Steel

SSAB, a Swedish multinational leader in high-strength and abrasion-resistant steel, has long leveraged its technological prowess to dominate niche markets. Yet its recent legal battles against counterfeiters in India and China reveal an equally critical strategy: intellectual property (IP) protection as a pillar of premium pricing and market control. By aggressively defending its Hardox® brand—a hallmark of its innovation—SSAB is not only safeguarding customer safety but also cementing its position as a high-margin industrial materials powerhouse. For investors, this dual focus on IP enforcement and sustainability-driven product differentiation positions SSAB as a standout play in a sector often overshadowed by cyclical volatility.

The Counterfeit Threat: A Direct Assault on Brand Integrity and Safety

Counterfeit Hardox® steel, which mimics SSAB's trademarked abrasion-resistant plates, poses dual risks: operational failure and safety hazards. In India, two companies—Naresh Steel & Engineering and Parmar Steel—were caught selling substandard products with forged mill certificates, falsely labeled as Hardox®. These knockoffs, often priced 30-40% below genuine products, erode brand value and endanger end-users. For instance, inferior steel in mining or construction equipment can lead to catastrophic breakdowns, as seen in a 2023 incident where a counterfeit Hardox® plate failed, damaging machinery worth millions.

SSAB's aggressive legal response—securing permanent injunctions, exemplary damages, and public apologies from the infringers—sends a clear message: the brand's reputation is non-negotiable. This approach not only deters copycats but also reinforces trust with customers, who increasingly demand traceable, high-quality materials.

Why IP Enforcement = Premium Pricing Power

The counterfeit crackdown directly supports SSAB's ability to command premium pricing, a rare feat in a commoditized sector. By ensuring only authorized distributors (like Kamlesh Metal & Alloy in India) sell Hardox®, SSAB eliminates price competition from inferior imitations. This channel control allows the company to maintain margins on products that often sell at a 20-30% premium over generic abrasion-resistant steel.

The math is simple: counterfeit goods compress margins by creating artificial supply. SSAB's legal victories reduce this threat, preserving the value of its IP. Investors should note that 70% of SSAB's revenue comes from high-margin engineered steels like Hardox®, underscoring why protecting this asset is existential.

China's IP Challenges: A Test of SSAB's Long Game

While SSAB's Indian successes are clear, its China strategy remains murkier. Historical cases, like the 2012 crackdown using Groth & Co's AIC-actions, suggest a playbook of local collaboration—Chinese-speaking teams and streamlined court procedures—to combat counterfeiters. Yet the absence of 2024-2025 data raises questions.

However, SSAB's sustained focus on market presence and compliance in China hints at deeper resilience. By embedding teams in the region, SSAB can navigate China's complex IP landscape, where enforcement often requires cultural and legal nuance. This alignment with local authorities may offset broader risks, such as tariffs or supply chain disruptions.

Critically, counterfeit suppression in China also protects SSAB's sustainability-driven innovations, like SSAB Fossil-free™ steel. As ESG standards tighten, customers will prioritize brands that deliver both quality and environmental accountability—exactly what SSAB markets.

Risks and the Investment Case

SSAB's strategy isn't without risks. Counterfeiters may adapt, and legal battles require sustained investment. Additionally, China's trade policies (like tariffs on U.S. steel imports) could disrupt global supply chains. However, these risks are mitigated by SSAB's structural advantages:

1. Branded Monopoly: Hardox®'s reputation as the gold standard in abrasion-resistant steel creates a moat against competitors.
2. Sustainability Leadership: Fossil-free steel positions SSAB to win contracts from green-conscious buyers in mining and infrastructure.
3. Geographic Diversification: Strong footholds in India, Europe, and China reduce reliance on any single market.

For investors, SSAB's stock (SSAB-A.ST) offers a contrarian bet in a materials sector often undervalued. With a P/E ratio below its 5-year average and a dividend yield of 4.2%, it balances growth and income.

Conclusion: IP as the New Blue Chip

SSAB's counterfeit crackdowns are more than legal victories—they're strategic moves to own the definition of quality in industrial steel. By protecting its IP, SSAB ensures its products remain synonymous with safety, sustainability, and premium pricing. In a world where counterfeit goods cost the global economy $2.3 trillion annually, companies like SSAB that defend their brands fiercely will thrive.

For investors, SSAB's dual focus on IP enforcement and fossil-free innovation makes it a long-term growth story in a cyclical industry. While short-term steel demand fluctuations may test nerves, SSAB's moat is widening. This is a stock to buy and hold for the next decade—a rare find in the industrial metals space.

Investment recommendation: Accumulate SSAB shares on dips below SEK 120, with a 12-month target of SEK 150.