South Korea’s steel major – POSCO announced its Q3CY19 results today. The major findings from the quarterly report are as follows:
1.Company’s crude steel production inched up on Q-o-Q basis- POSCO’s crude steel production inched up by 1% on Q-o-Q basis at 9,554 thousand tons in Q3CY ’19 in comparison to 9,444 thousand tons in Q2CY’ 19.However on a yearly basis the same remained largely stable against 9,565 thousand tonnes in Q3CY18. Crude steel production increased on more calendar days than previous quarter.
2.Company’s product sales volumes moved up in Q3CY19- Company’s sales volumes witnessed increase by 2% on a quarterly basis to 8,952 thousand tons in Q3CY ’19 against 8,746 thousand tons in previous quarter.However the same fell remained marginally stable against 8,983 thousand tonnes in Q3CY18.
3.Company’s export sales up in Q3CY ’19- Export sales stood at 3,979 thousand tons in Q3 increased by 7% against 3,722 thousand tons in Q2. Meanwhile on a yearly basis the same inched down by 1% against 4,013 thousand tons in Q3CY ’18.
4. Domestic sales move down in Q3CY19- Company’s domestic sales move down marginally by 1% Q-o-Q basis in Q3 at 4,973 thousand tons against 5,024 thousand tons in Q2CY’19.However on a yearly basis the same remained largely stable.
5. Product inventory down 1% in Q3CY’19- Company’s product inventory move down by 1% in Q3 to 1,220 thousand tonnes against 1,227 thousand tonnes in previous quarter.On yearly basis the same increased by 8% in Q3CY19 against 1,126 thousand tonnes in Q3CY’ 18.
6.Carbon steel prices remain stable in Q3CY19- Company’s carbon steel prices remain stable in Q3CY ’19 to 734 thousand KRW from 735 thousand KRW in Q2 CY’19. However Y-o-Y basis it moved down by 2% against 747 thousand KRW in Q3CY ’18.
7. Global steel demand likely to remain moderate- Chinese steel demand will grow owing to improved demand in infrastructure & property market.Although manufacturing sector is depressed.The U.S EU and advanced countries demonstrate sluggish demand as economic growth is stagnant.In India and Southeast Asia, still demand will be weaker than expected and emerging markets will see 0.4% growth in demand mainly due to the regions such as MENA.
8.Chinese steel market slow amid US- China dispute- In China, automobile, machinery and overall manufacturing sectors are declining.However expanded infrastructure investment, improved property market outlook and tax cut policy are positive in terms of demand, although the impact of same is very less.
9.Automobile production anticipated to remain weak in Q4CY ’19- In 2019, government stimulus was not sufficient to fully recover depressed auto market.During the period from Jan to Aug an automaker’s production volume is forecast to reduced by 40k cars due to partial strike and reduced OEM production.
10.Construction sector investment will narrow- Demand from the construction sector will reduce as demand in the private sector reduces in H2CY19 with expansion in public projects.Meanwhile civil engineering project orders from government and public organizations increased to offset sluggish growth in the private sector.
11.Shipbuilding volumes to increase in Q4CY19– The demand in shipbuilding sector likely to increase in Q4 owing to surge in orders in 2017 and 2018 over shorter delivery time.
12. Global iron ore prices to stabilize in Q4- Global iron ore prices are expected to remain at USD 90-95/MT in Q4 owing to winter production cuts in China.Also supply disruption during rainy season from Brazil and Australia may generate restocking demand from China.On an average basis iron ore prices in Q3 stood at USD 102/MT and is expected to be around USD 90/MT, CFR China in Q4 CY19.
13.Coking coal prices to rebound in Q4- Supply disruption in Australia owing to rainy season from Dec to Mar may result to restocking activities of coking coal from China.Thus Coking coal prices are expected to rebound in Q4 to USD 160-170/MT, FoB Australia due to expected purchase along with the resumption of China’s quota for coal imports in ’20 and steel mills’ restocking demand as they concern about supply disruption from rainy season(Dec to Mar) in Australia and severe cold in Russia and North America, etc
14. Sales volume from POSCO Maharashtra fall – Sales volume decreased as demand industries weakened and domestic competition became more severe. Sales volume fell to 81,000 MT in Q3 CY19 against 431,000 MT in Q2 CY19.
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