|
|
|
| NEWS |
|
|
|
| Welcome to Wanjoo Metals |
HOME > CUSTOMER CENTER > NEWS |
|
|
|
|
| TITLE |
Posco to Reduce Crude Steel Production for First Time |
| WRITER |
administrator |
DATE |
2008-12-19 07:45:08 |
|
|
|
Posco to Reduce Crude Steel Production for First Time
December 18, 2008. By Sungwoo Park,
Posco, Asia’s third-biggest steelmaker, will cut crude steel production for the first time in its 40-year history because the global economic slowdown slashed demand from customers, including automakers.
Output will be reduced by a total of 570,000 metric tons in December and January, the Pohang, South Korea-based company said today in an e-mailed statement. The planned cut accounts for about 2 percent of the 31.1 million tons produced in 2007.
ArcelorMittal and Nippon Steel Corp., the world’s two largest steelmakers, have reduced output by as much as a third as the global recession undermines demand. Posco, the No. 4- ranked producer, began cutting stainless steel output in July.
“The output cut is somewhat symbolic,” said Cho In Je, a steel analyst with KB Investment & Securities Co. in Seoul. “Unlike its rivals, who have cut output because of a sharp drop in actual demand, just a 2 percent cut is, instead, contrary evidence that the demand slump is not that serious for Posco.”
Posco rose 1,000 won, or 0.3 percent, to close at 392,500 won in Seoul trading, in line with the 0.5 percent gain in the benchmark Kospi index. The announcement of the production cut came about an hour before the end of trade.
Baosteel Group Corp., China’s biggest steelmaker, said on Dec. 4 there was a “drastic shrinkage” of automobile sheet sales in the second half. Worldwide crude steel output declined 12.4 percent in October, according to the International Iron and Steel Institute.
‘Threatened Profitability’
“We’ve been trying our best to delay the timing of a production cut as far as possible, but we came to the conclusion because falling demand from customers and declining export prices threatened profitability,” Posco said. The statement didn’t say whether the cuts may be extended beyond February.
Posco, which posted a 40 percent gain in third-quarter profit, said on Oct. 22 it will slash stainless steel output by about a third this quarter. Full-year stainless steel output will fall to 1.54 million tons from an initial target of 1.74 million tons, it said.
Posco warned earlier this week that a cut in crude steel output was possible “if things continue to be unimproved,” according to Ko Min Jin, a spokeswoman. Meritz Securities Co. also issued a report citing Chief Financial Officer Lee Dong Hee as saying output cuts couldn’t be ruled out.
“The cuts can also been seen as a tool to take an advantageous footing in its negotiations with mining companies on next year’s iron ore prices,” KB’s Cho said. Posco and other steelmakers agree 12-month prices for the raw material.
Iron-ore contract prices may halve to $46 a ton next year as demand from China slumps, Australia and New Zealand Banking Group Ltd. said last month. Cash prices for iron ore delivered to China have fallen 59 percent this half, prompting Rio Tinto Group, the second-biggest exporter, to delay shipments.
Posco expects raw-material imports and product inventories to decline as a result of the planned output reduction, today’s statement said.
|
|
|
|
|
|
|
| [ L I S T ] |
|
|
|
|
|
|
|
|
|
|
|
|
WanJoo Metals All rights reserved. |
|
TEL : +82-2-585-2581, 2571, FAX : +82-2-585-2587, 8799 |
|
FL.2 DaedeokPlaza Bldg, 206, Geumgok-Dong, Bundang-Gu, Seongnam-Si, Gyeonggi-Do 463-480, Korea |
|
|
|
|
|
|
|
|
|
|
|
|
