South Korea’s steelmaking giant POSCO said Friday it has lowered its production and sales forecasts for 2020 by 7% as the COVID-19 pandemic continues to ravage demand.
Crude steel production is now forecast at 34.1 million mt for the year, down 7.1% from 36.7 million mt earlier, and sales at 32.4 million mt, down 7.4% from 35 million mt earlier, the company said.
The revised forecasts came as POSCO reported its crude steel production over January-March fell 3.6% year on year and sales fell 3.5% as the company undertook upgrading and maintenance works.
POSCO’s crude steel output in the first quarter was also down 5.6% from the previous quarter at 9.07 million mt, while its steel product output was down 2.7% over the same period at 8.72 million mt, and down from 9.04 million mt the year before.
The company attributed the decline in Q1 output partly to a revamp of its No. 3 blast furnace at Gwangyang that began February 12 and will end May 28 – a period of 107 days.
Downstream production at the Gwangyang works’ No. 4 hot-rolled, cold-rolled and plate mills underwent separate maintenance over January-April.
At its Pohang works, a maintenance program was carried out at its No. 4 wire rod plant over March 23-March 31.
Auto demand slides
Steel demand from South Korea’s domestic automakers fell in Q1 as vehicle sales to the export market sank 17.6% year on year to 479,388 units, Ministry of Trade, Industry and Energy data showed.
Demand is expected to fall further in Q2 as South Korea’s automakers cut production and inventories.
Kia Motors Corp. said Thursday it will suspend production at two of its eight plants in South Korea, with its two Sohari plants in Gwangmyeong to shut over April 27-May 10 and again over May 22-25. Its parent Hyundai Motor is expected to shut several plants over April 30-May 5.
POSCO also lowered its 2020 revenue forecast to Won 25.2 trillion ($101.4 billion) from Won 30 trillion previously.
South Korea’s other major steelmakers Hyundai Steel and Dongkuk have also reduced production days at their electric arc furnaces since Q1 due to the weak market conditions.
“Production is down again; we are planning for more off days for our EAF,” a source at a South Korean mini-mill said, adding: “Crude steel production in Q1 has already taken a beating from all the cuts.”
— Clement Choo, Samuel Chin