Seoul: Posco, the world’s No.4 steelmaker, on Thursday said it would cut prices of its domestic steel products by up to 20% in its biggest-ever price reduction, which came earlier than expected as it seeks to compete against cheaper imports.
The South Korean company had said it would not slash steel prices until annual negotiations to decide import prices of iron ore were completed, which was likely to be in the second half.
“We’ve decided to lower the prices of all our products earlier than we had planned, as international steel prices are falling and raw material prices are also expected to decline,” Posco said in a statement.
The price reduction comes after Posco increased prices of its benchmark hot-rolled steel prices three times by a total of 63% last year when global steel prices soared to a record high above $1,000 per tonne, which more than halved to below $500 this year.
Posco, will slash prices of hot-rolled steel by 20% to 680,000 won ($548.8) per tonne and prices of cold-rolled steel by 16% to 785,000 won per tonne.
The move will reduce Posco’s annual sales by an estimated 2.7 trillion won but it will seek to protect profitability through a 1.3 trillion won cost-saving programme, the company said in a statement.
By 8:00am, shares in Posco were down 3.8% at 409,000 won, lagging a 1.7% drop in the broader market.
Asian steel shares were heavily battered on Thursday after S&P steel stocks tumbled 8.5% on Wednesday, as job losses and production cut plans by major steelmakers raised investor concerns over the sector’s recovery.
ArcelorMittal, the world’s top steelmaker, on Wednesday said it would cut almost 1,000 US jobs and AK Steel said it would likely idle a mill employing 750 workers, hit by vehicle production cuts.