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MarketScreener Homepage  >  Equities  >  Korea Stock Exchange  >  POSCO    A005490   KR7005490008


End-of-day quote. End-of-day quote Korea Stock Exchange - 10/23
220000 KRW   +4.76%
10/23S.Korea shares gain on upbeat U.S. data, stimulus hopes; rising local cases weigh
10/22POSCO : 3Q Profit Beat Market Views -- Earnings Review
10/22POSCO : 3Q Net Profit Rose 3.5% on Year
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Weak demand offsets fall in iron ore prices for steelmakers

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10/11/2019 | 01:06pm EDT
FILE PHOTO: Worker walks past steel rolls at the Chongqing Iron and Steel plant in Changshou

LONDON (Reuters) - Steelmakers' margins are due to deteriorate in coming quarters despite a fall in the price of raw material iron ore because steel prices have also slumped, pressured by weak demand.

"Even with the correction that we saw in iron ore, steel prices have fallen in just about every market, in Europe, the U.S. and China," said analyst Serafino Capoferri at Macquarie in London.

Benchmark spot iron ore for delivery to China hit a five-year high of $126.50 a tonne on July 3, having surged 74% over six months due to reduced supply from top exporters Australia and Brazil.

Since that peak, however, iron ore prices have slumped 26%.

"In the West, particularly in Europe, mills are really struggling. Demand there is weaker and the main headwind is the drop in car sales globally," Capoferri added.

Iron Ore Prices in China Slump 

The global automobile market, the second-biggest demand sector for steel after construction, has faltered recently due to declining economic growth, especially in top market China.

In China, total auto sales fell 6.9% in August, the 14th consecutive month of declines, as the top industry association warned of weak sales over the next three years.

Automakers in the U.S. market, the world's second-biggest, reported a sharp drop in September sales, while Moody’s cited the weak global auto market for keeping its credit outlook on Europe’s steel industry at negative.

"This will particularly hurt flat steel producers like ArcelorMittal, Thyssenkrupp and Tata Steel for whom automakers are important customers," Moody's analyst Goetz Grossmann said in a statement.


Chinese Auto Sales Slide

The slump in auto sales along with diminishing global economic growth have weighed on steel demand and prices.

The Chinese price of hot-rolled coil (HRC) steel, used in cars and home appliances, has shed 16% since July 1 while North American HRC prices have slid by 19% since Aug. 1.

Further erosion in U.S. steel prices is expected in the short term, Jefferies analyst Martin Englert said in a note.

"The earliest anticipated price recovery is likely 1Q20, but buyers remain sceptical pointing to the recent failed recovery late summer," he said.

Chinese, North America Steel Prices Tumble

Pressure on steel prices could also come from excess supply due to rising output in China during the winter.

In past years China has enforced closures and weaker production due to a strict crackdown on pollution during the main heating season, but this year the emission standards will be more flexible, analysts said.

"The overall target for air pollution control is tighter than last year, however it appears unlikely to result in material steel supply restrictions," UBS analyst Myles Allsop said in a note.

The world's top steelmaker is also having trouble containing increasing illegal new capacity, a government official said last month.

China steel production rose 6.6% last year to a record high, and so far this year has climbed 8.6%, according to the World Steel Association.

Japan's top steelmaker, Nippon Steel Corp, warned in August about weak margins due to surging iron ore prices, but there was a glimmer of optimism when prices came off their peak.

"The rapid fall in iron ore prices lifted steelmakers’ hopes around their ability to improve margins," Morgan Stanley analyst Alain Gabriel said in a note.

"(But) steel prices have now started to drift lower, possibly setting the scene for disappointment."

According to Reuters calculations based on Refinitiv data and consensus forecasts, the operating margin for U.S. Steel Corp is due to slide to 0.6% in the third quarter from 3.6% in the second quarter.

"To get improvement in steel margins, you need steel prices to recover, but it doesn't look very rosy for steel for next quarter or even for next year," Capoferri at Macquarie said.

Steelmaker Margins Hit by Weak Demand


(Reporting by Eric Onstad in London; Editing by Matthew Lewis)

By Eric Onstad

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MORGAN STANLEY 0.19% 51.87 Delayed Quote.1.47%
NIPPON STEEL CORPORATION 0.58% 1119 End-of-day quote.-32.35%
POSCO 4.76% 220000 End-of-day quote.-6.98%
TATA STEEL LIMITED 3.27% 423.35 End-of-day quote.-10.31%
THE GLOBAL LTD. -0.92% 216 End-of-day quote.-54.14%
THYSSENKRUPP AG 3.13% 4.674 Delayed Quote.-61.18%
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More news
Sales 2020 57 697 B 51,1 B 51,1 B
Net income 2020 1 229 B 1,09 B 1,09 B
Net Debt 2020 10 680 B 9,45 B 9,45 B
P/E ratio 2020 15,9x
Yield 2020 3,58%
Capitalization 17 521 B 15 503 M 15 506 M
EV / Sales 2020 304x
EV / Sales 2021 288x
Nbr of Employees -
Free-Float 89,8%
Duration : Period :
POSCO Technical Analysis Chart | MarketScreener
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Technical analysis trends POSCO
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus BUY
Number of Analysts 27
Average target price 255 370,37 KRW
Last Close Price 220 000,00 KRW
Spread / Highest target 31,8%
Spread / Average Target 16,1%
Spread / Lowest Target 0,00%
EPS Revisions
Jeong-Woo Choi Co-Chief Executive Officer & Director
In-Hwa Chang Co-President, Co-CEO & Director
Seung-Kyu Lim Senior Managing Director & Head-Finance
Hag-Dong Kim Director & Senior Executive Vice President
Tak Jeong Director, Senior EVP & Head-Marketing
Sector and Competitors
1st jan.Capitalization (M$)
POSCO-6.98%15 503
ARCELORMITTAL-20.39%16 112
NUCOR-10.82%15 152
GERDAU S.A.16.40%6 622