South Korea steel major – POSCO announced its quarterly results for Q1 CY18 yesterday (i.e. on 24 Apr’17). The major highlights of the results announced were as follows:
1.Crude steel production decline marginally by 3% Q-o-Q basis– POSCO crude steel production fell marginally by 3%,Q-o-Q basis to 9,288 thousand tons in Q1CY18 in comparison with 9,567 thousand tons in Q4CY17.However on yearly basis it rose slightly by 2.2% against 9,081thousand tons in similar quarter of previous year. Crude steel production reduced due to less calendar days.
2. Product sales up by 9% in Q1 CY18 – Company’s sales volume increased by 9% on quarterly basis to 9,294 thousand tons in Q1CY18 against 8,563 thousand tons in previous quarter.Besides this,product sale volumes of HRC expanded by 400 thousand tons and plates by 150 thousand tons in Q1CY18. Production boost and strong market trend led to a significant increase of product sales.
Product production volume increased on completing HR and CR mill rationalization during Oct’17 to early Jan’18. Company’s product production increases by 4% on yearly basis to 9,072 thousand tons in Q1CY18 as compared to 8,706 thousand tons in Q1CY17 due to completing facility rationalization in Gwangyang and Pohang Works.
3. Carbon steel prices up by 6%Y-o-Y in Q1 CY18 – Company’s carbon steel prices moved up by 6% in Q1CY18 to Won 710,000/MT from Won 671,000/MT tons in Q1CY17.However Q-o-Q basis the same rose marginally by 1% against Won 704,000/MT in Q4CY17.
4. Net profit surged by 65% in Q1CY18 – Company’s net profit in Q1CY18 showed the significant growth of 65% to 769 billion Won in comparison with 467 billion Won in Q4CY17.And on yearly basis it declined by 9% against 840 billion Won in Q1CY17.Also operating profit zoomed by 27% Q-o-Q to 1016 billion Won in Q1CY18 backed by shipment expansion and sales price hike.
Steel segment net profit up by 69% – Net profit from steel segment increased by whooping 69% Q-o-Q to 833 billion Won in Q1 CY18.
5. POSCO targets 37.6 MnT crude steel production – POSCO has set its crude steel production plan to 37.6 MnT in CY18 against 37.2 MnT in last year. On similar lines, it has set product sales plan to 35.9 MnT compared to 34.77 MnT in CY17.
6. Automobile production in H2 CY18 to remain weak– Auto production will remain weak due to sluggish demand in domestic and export market As per Korea Automobile Manufacturers Association the production of automobiles in Korea will increase by 13% in Q2 CY18 to 1,089 thousand cars against 963 thousand in first quarter.
7. Demand from Construction sector to remain slow in Q2CY18- Slowdown of construction investment in Q2CY18 amid reduction in new orders from housing market and public infrastructure investment.It is projected at 0.8%in Q2CY18 which was assessed at 1.5 % in Q1CY18.
8. Shipbuilding new orders to decrease – In Q2 CY18 new orders of shipbuilding is expected to go down to 4.3 MnT which was 5.4 MnT in first quarter.
9. Global iron ore prices price forecast at USD 65-70/MT – Iron ore prices continued to remained on higher side due to steelmakers’ restocking demand before the Chinese New Year and stood at USD 77/MT in Jan-Feb’18. And it is estimated that iron ore prices will decline remain USD 65-70/MT, CFR China in Q2CY18 owing to imposition of USA trades restrictions on steel imports may lead to decline in iron ore prices on quarterly basis, enough capacity to supply iron ore.
10. Coking coal prices expected to decline in Q2 CY18- Premium HCC Coking coal prices is expected to decline in Q2CY18 to USD 180-190/MT, FoB Australia from USD 229/MT in Q1CY18.In first quarter whether disruptions in Australia kept the coking coal prices firm. However in coming quarter maintenance of ports and railroads in Australia could temporarily cause shipping delays and the price is expected to decline.
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