POSCO, which recorded a loss for the first time since its foundation in the second quarter of this year due to the impact of COVID-19, returned to profit in the third quarter. The recovery was thanks to the rebounding global demand for steel and steel price increase. The company is expected to continue its stable performance in the fourth quarter.
As industries around the world have resumed operations and demand for cars has recovered since July, the overall trend reversed. As POSCO’s blast furnace 3 at a steel mill in Gwangyang resumed production in July, the company was able to respond flexibly to the increasing global demand. The surge in Chinese demand for steel, which led to a 40 to 50 percent steel price increase in the third quarter from the second quarter, is another contributing factor for the South Korean steelmaker’s profits.
POSCO expects that its main steel business will all achieve stable performance in the fourth quarter. The seasonality will drive up steel prices while many countries’ expanded spending to recover from COVID-19 will also lead to an increase in both prices and demand. The company’s efforts to save costs by directly investing in mines and building a stable material sourcing network will also help improve its profitability.
Internally, the company believes that a management strategy focusing on cash flow also contributed to a faster recovery from the COVID-19 crisis.
Hyung-Seok Seo firstname.lastname@example.org