POSCO raises steel prices
South Korea's POSCO, the world's fourth-biggest steelmaker, raised its prices by as much as a fifth as it seeks to pass on soaring raw material costs, but its shares fell as the market had expected a bigger price increase.
By PTI |
SEOUL: South Korea's POSCO, the world's fourth-biggest steelmaker, raised its prices by as much as a fifth on Thursday as it seeks to pass on soaring raw material costs, but its shares fell as the market had expected a bigger price increase.
The increase, just two months after POSCO last put up prices, comes after the company agreed to pay Brazilian miner Vale 65 per cent more for its iron ore and agreed to treble what it pays an Australian supplier for coking coal.
Rising raw material costs are pushing up inflationary pressure across Asia, adding to soaring food and energy bills, and hitting steel mills hard as they do not own large mining assets, compared with western rivals such as ArcelorMittal and US Steel Corp.
POSCO, which sells three-quarters of its products at home and depends heavily on imported raw materials, said it would raise domestic prices of its hot-rolled steel to 700,000 won ($717.4) a tonne from April 17, up 20.7 percent. Cold-rolled steel and shipbuilding plate will cost 785,000 won a tonne, up 18 per cent.
Analysts had expected a slightly bigger price increase as POSCO has lagged rivals in raising prices and as iron ore and coking coal prices, which account for more than a fifth of production costs, have soared this year.
"The price hike is slightly less than we expected but the increase will help absorb rising raw material costs and put it on track to meet its 2008 target of 4.8 trillion won in operating profit," said Jung Ji-yun, analyst at CJ Investment & Securities.
The increase, just two months after POSCO last put up prices, comes after the company agreed to pay Brazilian miner Vale 65 per cent more for its iron ore and agreed to treble what it pays an Australian supplier for coking coal.
Rising raw material costs are pushing up inflationary pressure across Asia, adding to soaring food and energy bills, and hitting steel mills hard as they do not own large mining assets, compared with western rivals such as ArcelorMittal and US Steel Corp.
POSCO, which sells three-quarters of its products at home and depends heavily on imported raw materials, said it would raise domestic prices of its hot-rolled steel to 700,000 won ($717.4) a tonne from April 17, up 20.7 percent. Cold-rolled steel and shipbuilding plate will cost 785,000 won a tonne, up 18 per cent.
Analysts had expected a slightly bigger price increase as POSCO has lagged rivals in raising prices and as iron ore and coking coal prices, which account for more than a fifth of production costs, have soared this year.
"The price hike is slightly less than we expected but the increase will help absorb rising raw material costs and put it on track to meet its 2008 target of 4.8 trillion won in operating profit," said Jung Ji-yun, analyst at CJ Investment & Securities.
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