South Korean integrated steelmaker Posco plans to shut its 50-year-old blast furnace Number 1 at Pohang next year amid weak demand and mounting losses, according to local media.
The Number 1 blast furnace was constructed in 1973 and has a capacity to produce 1.3mn mt crude steel, annually. It accounts for 3pc of Posco’s total production capacity. In 2017, Posco had announced its plan to shut the furnace, however, it remained operational and has been fully functional after two consecutive renovations.
Drastic dropped in steel demand due to the COVID-19 pandemic has severely impacted Posco’s production, sales volumes and earnings. In Q2, Posco reported an operating loss of $165mn. The company’s sales volumes fell by 11pc due to the imposition of COVID-19 related shutdowns in major markets. Automotive steel sales fell as numerous car factories shut production. The company’s crude steel output declined by 17pc to 7.79mn mt.
The steelmaker intends to shut down or revamp it’s Number 2 furnace situated at Pohang before 2025. By closing or updating older facilities Posco looks to improve its overall productivity.