POSCO sees 3% fall in 2020 steel output on soft car, construction demand
South Korea's POSCO expects to produce about 36.7 million mt of crude steel in 2020, down 3.4% from 2019, citing weaker demand from the local construction and car industries, the steelmaker said Friday.
"Construction investment will decrease year on year but the rate will be narrower as public investment is expected to expand," it said, projecting the investments to fall by 2.3% in 2020 compared with a 4% fall in 2019, both on the year.
The "government will increase SOC (social overhead capital) to vitalize the economy," POSCO said. State-run bodies plan to invest Won 60 trillion ($51.2 billion) to build power plants and develop satellite cities in 2020, up by Won 6.5 trillion from 2019.
As for the car industry, POSCO expects annual production to stay below 4 million vehicles in 2020, at 3.98 million units. Vehicle production in 2019 fell below 4 million units for the first time since 2009, at 3.95 million units.
"Auto production may fall under 4 million units due to delayed recovery in domestic and export markets," it said.
Part of the lower output may be from plans by the steelmaker to expand its No. 3 blast furnace at Pohang, which has an inner volume of 5,600 cu m.
The expansion work is scheduled to take about three months to complete, starting from February 2020, POSCO said.
But POSCO expects the South Korean shipbuilding industry to goffset some of the weaker demand, forecasting the industry to win 26.2 million gross tons in new orders over 2020, a 50.6% surge from 17.4 million gross tons in 2019.
"New orders [are] expected to grow as global demand recovers along with environment-friendly ship demand," it said.
On steel supply and demand for 2020, POSCO forecasts South Korea's steel production at 73.4 million mt, a dip from 73.7 million mt in 2019, citing data from the POSCO Research Institute.
"Global steel demand growth in 2020 [is] likely to slow down with low economic growth rate and continued trade dispute," it said.
-- Clement Choo
