Seoul: South Korea’s Posco, the world’s No.4 steelmaker, said on Thursday it would cut steel output by around 10% during December and January, as inventory increased due to tumbling demand from auto and home appliance makers.
The move, its first output reduction ever, is to respond to sharply deteriorating domestic market conditions, said the company.
“We have delayed timing of a production cut as long as we can but Thursday’s move was made because end-users are planning to halt production during the year end and falling export prices are also likely to hit profitabilities,” Posco said in a statement.
It produces around 2.75 million tonnes of crude steel a month and plans to reduce 200,000 tonnes of output in December and another 370,000 tonnes in January.
Posco had been the sole steelmaker among the global majors refusing to reduce output partly because it has benefited from a weaker won currency.
Steel inventories in South Korea, where Posco earns 70% of its sales, have risen by 1.2 million tonnes from the beginning of year 2008, as new housing starts tumbled and auto makers slashed production.
Shares of Posco were up 2.2% to 400,000 won versus a 0.3% gain in the broader market.