South Korean Posco Group saw its second-quarter operating profit plunge by more than 38 pc amid steel oversupply due to the sluggish property market in China.
Posco Holdings Inc. disclosed that its preliminary operating profit for the second quarter came to KRW 1.3 trillion (USD 1.03 bln), down 38.1 pct from the same period a year earlier. The decline is attributed to the fall in steel prices.
As new real estate construction in China draws a downward curve, Chinese steel that would have been used as construction materials is being sold overseas at low prices, the company said.
The price of HR steel in China, in fact, stood at USD 542 per ton at the end June, down 18.6 pc from a year ago.
The average import price of Chinese HR steel in Korea also dropped 28.5 pct during the same period.
“The Chinese steel market is showing a completely different pattern compared with a year earlier,” said Chang Jae-hyuk, an analyst at Meritz Securities Co. “The entire steel industry is in recession as the Chinese real estate market fails to rebound despite the government’s stimulus measures.”
1 USD / 1,263 KRW
