South Korean steelmaker Posco reported a significant drop in its crude steel production in Q2 FY2020. The company produced 7.79mn mt of crude steel in Q2 FY2020, down by 17pc from 9.44mn mt in Q2 FY2019 and 14pc lower than 9.06mn mt in Q1.
The steelmaker revised its steel products sales outlook for 2020 and lowered sales forecast to KRW55.4 trillion ($46.24bn) from its April forecast of 57.5 trillion. The company anticipates steel demand in South Korea to recover in Q3 FY2020. Global finished steel prices have started recovering post Q2 driven by robust demand from China and higher raw materials prices.
| Posco’s sales in Q2 | |||
| Quantity in 1000mt | Q2 2020 | Q1 2020 | Q2 2019 |
| Domestic | 4234 | 4728 | 5024 |
| Export | 3528 | 3892 | 3722 |
| Inventory | 1121 | 1107 | 1227 |
| Posco’s production in Q2 | |||
| Quantity in 1000mt | Q2 2020 | Q1 2020 | Q2 2019 |
| Carbon steel product | 7460 | 8242 | 8390 |
| Stainless Steel | 391 | 481 | 466 |
Posco’s consolidated operating profit dropped by 84.3pc to KRW168bn in Q2, down from KRW1.1 trillion in the prior year quarter as
the COVID-19 pandemic significantly reduced finished steel demand from automakers and construction companies, stated the company’s earnings release. Restrictions imposed to control the spread of the pandemic also impacted sales.
In Q2, revenues fell by 15.9pc to KRW13.7 trillion and net profits by 84.6pc to 105bn. Sales of finished products lowered to 7.76mn mt down by 10pc from 8.62mn mt in Q1 and by 11.3pc from 8.75mn mt in Q2 FY2019. The sales volume declined amid sluggish market while product inventory maintained last quarter’s level.
Posco adopted flexible production and sales system to mitigate the impact of weak demand amid the pandemic. The company had postponed the restart of Gwangyang #3 blast furnace from June to July to reduce production.
($1=KRW1,197)