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15 Things that we Learned from POSCO Q3 CY17 Results

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BigMint Bureau

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27 Oct 2017, 18:23 IST

15 Things that we Learned from POSCO Q3 CY17 Results

South Korea steel major - POSCO announced its quarterly result for Q3 CY17 yesterday (i.e. on 26 Oct'17).

1. Crude steel production up by 11% Q-o-Q basis-POSCO crude steel production reported a surge of 11%,Q-o-Q basis to 9,751 thousand tons in Q3CY17 in comparison to 8,801 thousand tons in Q2CY17.However on yearly basis it rose marginally by 0.5% from 9,800 thousand tons in similar quarter of previous year.

2. Product sales up by 6% in Q3 CY17 -Company's sales volume increased by 6% on quarterly basis to 8,961 thousand tons in Q3CY17 against 8,463 thousand tons in previous quarter.Besides this,product sale volumes of HRC expanded by 277 thousand tons and plates by 121 thousand tons in third quarter of CY17.

3. Carbon steel prices fell in Q3 CY17 - Company's carbon steel prices registered a fall of 3% in Q3CY17 to Won 687/MT from Won 705/MT tons in Q2CY17.However Y-o-Y basis it reported the significant hike of 21% against 570K tons in Q3CY16.

4. Export ratio down, domestic sales up - Export ratio fell and on the other hand domestic sales went up by whopping 53.7% by introducing imported products.

5. Net profit up by 43% in Q3 CY17 - Company's net profit in Q3CY17 showed the significant growth of 43.4% to 730 billion Won in comparison with 509 billion Won in Q2CY17.And on yearly basis it shoot up by 26% against 579 billion Won in Q3CY16.

6. Steel segment net profit up by 41% - Net profit from steel segment increased 41% Q-o-Q to 755 billion Won in Q3 CY17

7. POSCO increased its production and sales projection - POSCO has revised its crude steel production plan to 37.1 MnT against 37 MnT mentioned previously. On similar lines, it has revised its sales business plan to 34.9 MnT compared to previously planned target of 34.6 MnT. In 2017 POSCO crude steel production is projected to go up by 1% to 37.1 MnT which was at 37.5 MnT in CY16.Projected product sales in CY 17 will be around 34.9MnT.

8. Strong Chinese steel demand- As per company report Chinese steel prices continues to remain on higher side owing to strong demand and supply constraint due to induction furnace shutdown.China's HRC spot prices reached to peak levels in Sep'17 since Mar'13.China's steel PMI is heard over 50PMI since May'17

However Chinese steel demand is misguiding in 2017 due to closure of induction furnaces as the actual demand increase is projected upto 3%.However owing to huge investment and higher prices Chinese demand outlook will remain positive in 2018.

10. Global steel demand outlook -Global steel demand will witness the gradual increase in CY18 on account of strong demand in emerging markets.Advance countries is expected to show 1% of growth in demand while developing countries' demand is expected to grow about 5%.

11.Korean steel demand in automobile sector likely to increase- Auto production will start to show recovery in domestic demand and export sales in H2CY17.As per Korea Automobile Manufacturers Association the production of automobiles in Korea will increase by 20% in Q4CY17 to 1209 thousand cars against 1002 thousand in third quarter.

12. Demand from Construction sector to remain slow in Q4CY17- - Reduction in SOC budget by government and property regulation will result to slowdown of construction investment in H2CY17.It is projected at 4.3%in Q4CY17 which is assessed at 5 % in Q3CY17.

13. Shipbuilding volumes to decrease - In Q4CY17 volumes of shipbuilding is anticipated to go down at 3.1MnT which is 6.7 MnT in third quarter.This may lead to softening of plate prices.

14. Global iron ore prices to remain strong - Iron ore prices continued to remained on higher side but the tight supply of high-content iron ore and pellet held the prices firm in Q3CY17.And it is forecasted that iron ore prices will remain USD 60-65/MT, CFR China in Q4CY17.However environment restrictions may affect the demand and results to decline in iron ore price in Q4CY17.

15. Coking coal prices to fall amid falling Chinese demand- Coking prices is expected to decline in Q4CY17 to USD 170-180/MT from USD 189/MT in Q3CY17.Safety inspection of mines and restocking of demand by the companies pushed the coal prices on higher side.However steel production cut as ordered by Chinese government will lower the demand of met coal and falling of coal prices in coming quarter.