POSCO Achieves Best Performance in 10 Years... Second Quarter Results Even Better

Q1 Preliminary Operating Profit 1.552 Trillion Won
Better Q2 Performance Expected Due to Strong Market Conditions and Improved External Environment

[Asia Economy Reporter Hwang Yoon-joo] POSCO has made a spectacular comeback after a year, overcoming the impact of COVID-19. The profitability of the steel sector improved due to rising product sales prices, recording the highest quarterly performance in 10 years. With the global steel market recovering, this positive trend is expected to continue into the second quarter.

On the 12th, POSCO announced its preliminary results, reporting an operating profit of 1.552 trillion KRW for the first quarter of this year (consolidated basis), a 120% increase compared to the previous year, and sales revenue of 15.9969 trillion KRW, up 9.9%. This is the first time in 10 quarters since the third quarter of 2018 that POSCO has recorded an operating profit exceeding 1.5 trillion KRW.

In the second quarter of last year, POSCO recorded its first operating loss (individual basis) since its founding due to the impact of COVID-19. The reason for POSCO's revival after one year lies in the steel market conditions. As demand for global steel increased with the recovery of key industries such as automotive, construction, and shipbuilding, product sales prices also rose. The industry estimates that the first quarter price increase will reach around 95,000 to 100,000 KRW per ton, higher than the expected 83,000 KRW per ton.

Expectations for second-quarter performance are even higher. With the United States and China implementing large-scale economic stimulus measures, global steel demand is surging. Currently, the spread between China's hot-rolled coil prices and raw material costs is reaching historic highs due to increased demand, and the U.S. hot-rolled coil prices are also hitting record highs day after day.

Meanwhile, policy changes in China and the U.S. are also favorable. The Chinese government is currently considering lowering the export tax rebate rate. If the reduction or abolition of export rebates is confirmed, it would lead to price increases for Chinese steel products, benefiting the domestic steel industry. Discussions on amending the U.S. Trade Expansion Act are also positive news. If the amendment passes, exports from other Asian countries to the U.S. will increase, tightening steel supply and demand within the Asian market, allowing POSCO to indirectly benefit.