[Asia Economy Reporter Jeong Dong-hoon] Last year, buoyed by rising sales prices due to increased raw material prices such as iron ore, the steel industry has been announcing record-breaking earnings one after another. However, there are also concerns that this year’s market conditions may not be favorable due to factors such as the Chinese real estate slump and economic slowdown.
According to the industry on the 29th, POSCO recorded its highest-ever operating profit last year, exceeding 9 trillion won. POSCO announced at a corporate briefing the day before that its consolidated sales for last year reached 76.332 trillion won, with an operating profit of 9.238 trillion won. Sales increased by 32.1% compared to the previous year, and operating profit rose by 284.4%.
The strong performance of POSCO is attributed to the rise in steel prices and remarkable progress in new business sectors. The steel division achieved record-high results last year as domestic demand and sales prices both rose due to economic recovery and expanded sales focused on high value-added products.
Overseas steel subsidiaries such as Krakatau POSCO and POSCO Maharashtra also saw significant improvements in performance due to the global market recovery. POSCO forecasts this year’s consolidated sales at 77.2 trillion won and investment costs at 8.9 trillion won. The targets for crude steel production and product sales are projected at 36.5 million tons and 34.7 million tons, respectively.
Hyundai Steel also recorded its highest-ever performance last year, supported by price increases in key products such as automotive steel sheets and shipbuilding plates, as well as strengthened business competitiveness. Hyundai Steel disclosed on the 27th that its consolidated sales for last year were 22.8499 trillion won, with an operating profit of 2.4475 trillion won.
This performance is believed to be due to price increases in major products such as automotive steel sheets and shipbuilding plates amid favorable global steel market conditions, along with business competitiveness enhancement through adjustments in low-profit businesses such as thin hot-rolled and color steel sheets. Hyundai Steel stated, "Despite the forecasted global economic slowdown this year, we plan to optimize sales operations in line with the recovery of demand industries and further strengthen profitability-centered business competitiveness to maintain a stable high-profit structure." Hyundai Steel has set a particular goal to strengthen global supply of automotive steel sheets this year, aiming to achieve sales of 1 million tons of automotive steel sheets.
There are also views that the steel industry’s market conditions may be somewhat unfavorable this year. The Federation of Korean Industries predicted a negative outlook for steel and shipbuilding exports this year based on a survey on export prospects for six major industries including semiconductors, automobiles, petroleum products, steel, shipbuilding, and displays.
Steel exports are expected to decrease by 8.5% from $36.4 billion last year. Although advanced countries are expanding infrastructure investments through economic stimulus measures, demand growth is expected to be limited due to the Chinese real estate market slump and economic growth slowdown. Steel prices, which had surged due to supply shortages, are also expected to be adjusted.
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