Iron and Steel

South Korea: POSCO Crude Steel Output Increases 7% in Q2CY18

South Korea: POSCO Crude Steel Output Increases 7% in Q2CY18
Mining News Pro - South Korea steel major - POSCO announced its quarterly results for Q2CY18 yesterday (i.e. on 23 Jul’18).The major highlights of the results announced were as follows:
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1.Crude steel production inched up marginally in Q2CY18 - On quarterly basis company’s crude steel output rose slightly by 1% to 9,377 thousand tons in Q2CY18 against 9,288 thousand tons in previous quarter.However the same reported growth of 7% on Y-o-Y basis in Q2CY18 in comparison with 8,801 thousand tons in Q2CY17 due more production days.

2.Product sales volume moved down by 4% in Q2CY18 - Company’s product sales decreased by 4% on quarterly basis to 8,960 thousand tons in Q2CY18 as compared to 9,294 thousand tons in Q1CY18 due to facility maintenance in Gwangyang Works.Besides this,product sale volumes of HRC reduced by 263 thousand tons and CRC expanded by 22 thousand tons in Q2CY18.

3.Carbon steel prices up by 3% Q-o-Q in Q2CY18 - Company’s average carbon steel prices moved up by 3% in Q2CY18 to Won 730 thousand tons against Won 710 thousand tons in Q1CY18.However Y-o-Y basis the same rose by 4% Y-o-Y basis against Won 705 thousand tons in Q2CY17.

4.Net profit decline by 25% Q-o-Q in Q2CY18 - Company’s net profit in Q2CY18 decline by 25% to 580 billion Won in comparison with 769 billion Won in Q1CY18.And on yearly basis it surged by 14% against 509 billion Won in Q2CY17.Also operating profit reduced by 19% Q-o-Q to 822 billion Won in Q2CY18 against 1,016 billion Won in previous quarter amid fall in sales volume and increase in cost.Steel segment net profit up by 20% and operating profit moved up by 14% in Q2CY18.

5.POSCO expects to produce 37.7 MnT crude steel output in CY18 - POSCO has set its crude steel production plan to 37.7 MnT in CY18 against 37.2 MnT in CY17.Similarly the estimated product sales is expected at 36.1 MnT compared to 34.77 MnT in CY17.

6.Automobile production expected to remain weak in Q3 - Auto production will remain weak due to dull demand from end users coupled with reduced export volumes.As per Korea Automobile Manufacturers Association, the production of automobiles in Korea may decline by 5% in Q3CY18 to 993 thousand cars against 1,042 thousand which was recorded in second quarter of CY18.

7.Demand from construction sector remain soft - Reduction in new orders from housing market along with weakening public infrastructure investment resulted to slowdown of construction investment in Q3CY18.It is projected to fall by 1.4% in Q3CY18 against Q2CY18.

8.Global iron ore prices price likely to trend around at USD 60-65/MT- In second quarter of CY18 iron ore prices continued to remain at USD 60/MT, CFR China amid ample supply.Also Chinese iron ore port inventory hits the another record in Mar ’18 at stood at 160 MnT along with major suppliers expanding production over increased iron ore inventory.However in third quarter iron prices is expected to be around USD 60-65/MT CFR basis amid sluggish demand and slowdown of construction activities in China.

9.Coking coal prices expected to fall in Q3CY18- In Q2CY18 coking coal prices stood at USD 180/MT amid seasonal supply disruption.However owing to maintenance of East Australian railroads coking price escalates upto USD 200/MT in second quarter.However in third quarter prices may decline amid off season in China along with supply disruption from Australia which may result to reduce coal shipping volumes. Prices are expected to remain at around USD 175-185/MT, FoB Australia in Q3.




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