Saturday, 19 Feb 2011
POSCO the world’s third biggest steelmaker by output and its units raised their cost cutting target for this year by 20% to sustain profits amid rising iron ore and coal prices.
Mr Chung Jae Woong a spokesman of POSCO said that the group aims to cut overall costs by KRW 2.4 trillion (USD 2.2 billion) this year from a previous target of KRW 2 trillion in an effort to improve competitiveness.
Ms Kim Gyung Jung an analyst with Eugene Investment & Securities Co in Seoul said that “That’s part of POSCO’s efforts to sustain stable profits given that raw material costs are rising, while it’s not easy for them to pass on cost gains to customers.”
POSCO which underperformed the local benchmark stock index last year, in January reported a worse than expected drop in fourth quarter profit after raw material costs gained and demand from builders and home-appliance makers waned. Japan’s Nippon Steel Corp and Sumitomo Metal Industries Ltd said that they plan to combine to cut costs.
HSBC Holdings Plc said that iron ore prices almost doubled from the first quarter to the end of 2010, while coking-coal costs gained 38%. Coal has risen since floods disrupted mining in the northeast of Australia, the biggest exporter.
According to Credit Suisse Group AG on January 7, the price of iron ore will average 21% higher this year and may jump to a record should anticipated supply growth be curbed. Iron ore and coking coal are the two main ingredients for making steel.
(Sourced from Bloomberg)
Tags:steelmakers, steel mills, South Korean
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