Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Increasing steel manufacturing costs from higher iron ore prices will likely affect POSCO’s profitability until at least the end of Q1-2020. 


The company, which reported lower operational profits in 2019 for this reason, expects iron ore prices to remain $90-95/ton in Q1.


POSCO does not expect major long-term impact from the  coronavirus epidemic in China— the steelmaker’s largest importers. In a statement, the company said that, save for Wuhan, where the virus was first identified, it doesn’t anticipate delays or troubles exporting to China once the extended Lunar New Year holidays ends.


The Korean steelmaker, which produced around 38mn t (34.47mn mt) in 2019, indicated crude steel production may decline slightly in 2020 to approximately 36.7mn t in 2020 because, beginning in February, its blast furnace No. 3 will spend three months idled for revamping and expansion. 


POSCO’s crude steel production increased by around 269,000t in 2019 compared with 37.7mn t in 2018 due to higher output from its Gwangyang Works.


Its steel products output fell by 88,000t in 2019 to around 35.901mn t, compared with 35.989mn t a year earlier.


The company’s total sales volume increased from 35.5mn t in 2018 to 35.9mn t in 2019, despite a 2.2pc decline in domestic sales. 

Its world top premium products sales crossed the 10mn t mark after higher demand from the construction and wind power sectors. This segment’s sales grew from 9.6mn t in 2018 to 10.1mn t in 2019. 


POSCO’s consolidated revenue declined by 0.9pc to 64.3tn won ($53.9bn) on softer earnings from its steel segment, the company reported, adding that its operating profit also decreased by 2.5pc to 3.86tn won compared with 5.5tn won reported in the prior year.


US$1 = 1,197.33 won (as on January 31, 2020)

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