Korean steel producer, POSCO (PKX) has been investing for long in stainless steel to capitalize on the growing demand for the same. The company recently completed the construction of a stainless cold-rolled factory with an annual production capacity of 150,000 ton in Vietnam.
The company’s Vietnamese subsidiary, POSCO VST had started construction of the factory in December 2010. Presently, the subsidiary’s annual steel production capacity has reached a whooping 235,000 tons. In addition to expanding production capacities, POSCO also aims at adding an additional rolling machine by 2015.
Cold-rolled stainless steel demand in Vietnam is expected to increase 32% to 330,000 tons by 2015. Besides, it has been predicted that stainless steel demand in South Asia would grow at 12% to 950,000 tons by 2015. POSCO’s presence in Southeast Asia, through POSCO VST and Thainox, secures about 67% share of cold-rolled stainless steel demand for the company.
Of late, POSCO’s revenue increased roughly 44% year over year in fiscal 2011on the back of solid finished product sales, especially to shipbuilders and automakers. Crude steel production increased 11% while higher input costs dragged down the margins.
The company also projected a 3% year-over-year increase in global steel demand and roughly a 1% increase in domestic demand in 2012. Stainless steel demand growth is expected to be roughly 3.4%.
POSCO is the world’s third largest steel producer on the basis of output. The company grows well from its wide regional diversifications, higher proportion of value-added products in its product mix and new facility additions over the longer term. However, extensive competition faced from industry players like Arcelor Mittal (MT) and Nippon Steel Corp. (NISTY.PK) acts as an impediment to growth.
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