On July 20, POSCO announced these figures during an investor conference call for Q217. POSCO executives explained that performance declined slightly due to the deterioration of earnings in the steel, construction and energy sectors, but its consolidated revenue and operating profit rose by 16.2% and 44.3% YoY, respectively.

Another factor that slowed growth was renovations for POSCO’s Pohang Blast Furnace #3 and the hot-rolled and thick plate plants. As a result, crude steel production and sales decreased in the second quarter. Also, due to sales of high-priced inventory, which was produced in the first quarter when raw materials were the most expensive, the consolidated revenue and operating profit decreased by 0.9% and 28.3%, respectively, compared to the first quarter.

POSCO’s separate revenue increased by 18.7% YoY to KRW 7.1343 trillion, and its operating profit decreased by 17.9% YoY to KRW 585 billion due to the increased costs of raw materials.

Although still operating in surplus, the E&C division and the trading and energy divisions saw a drop in their operating profit from the first quarter.

POSCO’s consolidated debt to equity ratio was 69.6%, the lowest since 2010, and its standalone debt ratio was 16.3%, the lowest ever. In contrast, the share of sales of World Premium Products, high value-added products, went up by 10.7% YoY to 56%, the highest ever. POSCO killed two birds with one stone, as it reinforced financial soundness as well as increased profitability.

Due to the restructuring of the Chinese steel industry and economic recovery in advanced countries, POSCO forecasts steel products will continue to be in high demand. POSCO is planning to make continued efforts to generate revenue by securing financial soundness, reducing costs and increasing the sales of World Premium Products.

Accordingly, POSCO revised its consolidated and stand-alone revenues that were set at the beginning of the year, increasing them by KRW 4.5 trillion and KRW 2.8 trillion, respectively. The new consolidated revenue is KRW 59.3 trillion and the new separate revenue is KRW 28.4 trillion.

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On April 21, POSCO held an Investor Relations (IR) conference call to announce improved operating performance of its first quarter.

Although POSCO recorded KRW 12.46 trillion in revenue in the first quarter on a consolidated basis, which is a slight decrease from the previous quarter, it recorded KRW 659.8 billion in operating profit, KRW 319.3 billion up from the previous quarter, and KRW 352.5 billion in net income during the term,  KRW 243 billion up from the previous quarter. The company also accounted for 5.3% in operating profit margin, which is 2.9%p up from the previous quarter.

Operating profit increased due to improvement in sales performance in steel and trading 

These positive results can be attributed to increased performance in the steel and trading divisions, being operated by POSCO Daewoo and POSCO-China, even though the construction division showed a decrease in sales and profits. Overseas steel corporations exhibited remarkable improvement in sales performance, as Zhangjiagang Pohang Stainless Steel (ZPSS) and POSCO-Mexico realized profits, and the operating deficits of PT. KRAKATAU POSCO and POSCO SS-VINA are beginning to be reduced.

KRW 582.1 billion in operating profit, 10.1% in operating profit margin (in paraent basis) 

On a parent basis, POSCO recorded KRW 5.767 trillion in revenue, KRW 582.1 billion in operating profit and KRW 445.9 billion in net income during the term. Although revenue has slightly decreased, the company recorded KRW 210.9 billion in operating profit and KRW 184.1 billion in net income during the term, which is an increase from the previous quarter. This is driven by the sales increase of World Premium (WP) products, POSCO’s proprietary high-value products, along with the improvement of market conditions due to the price increase of carbon steel products and restructuring of Chinese steel companies.

POSCO recorded 3.682 million tons in sales volume of WP products, which amounts to an increase of 255,000 tons from the previous quarter. Among total product sales, the sales of WP products accounted for 44.5%, which is an increase of 4.8%p from the previous quarter.

Also POSCO recorded 10.1% in operating profit margin which is an increase of 3.9%p from the previous quarter.

POSCO forecasts to improve the financial structure of KRW 4 trillion within this year by accelerating the restructuring of subsidiary companies

POSCO realized continuous improvement of its financial structure. On a consolidated basis, it recorded 77% in debt-to-equity ratio, which is a decrease of 1.4%p from the previous quarter, while registering 19.2% on a parent basis, which is 0.1%p down from the previous quarter.

In particular, on a parent basis, the company recorded -356.3 billion in net debt in the first quarter from 341.3 billion in the  previous quarter as total cash and cash equivalents have increased more than debt. This is the result of improving the company’s overall financial structure that it has strived for over the last two years.

POSCO completed 6 subsidiary restructuring cases in the first quarter, which have been carried out since the announcement of the management reform plan in July of last year. The company sold Genesis, a subsidiary in the power generation sector, and finalized liquidation of POSCO-RUS, while completing the merger of POSCO Green Gas Technology. It is expected that the improvement effect will reach to approximately KRW 4 trillion through the restructuring of subsidiary companies.

Meanwhile, POSCO announced its sales goal of KRW 58.7 trillion on a consolidated basis, and 37.2 million tons for the production of crude steel and 35.3 million tons for product sales. The company also estimated that its investment costs amounted to KRW 2.8 trillion, which is KRW 300 billion up from last year, and net debt was KRW 14.6 trillion, which is KRW 1.9 trillion down from last year.

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As a result, in December of the same year, Chinese President Xi Jinping declared that China formally entered an era of xin chang tai. In English, the term translates to “new normal” or “a new state of normality.” His statement acknowledged the nation’s slowing growth and addressed the need to create a growth structure centered on investment and innovation.

China’s “new normal” is about transitioning to this new way of growth. Changes in the country’s economic fundamentals, including the “new normal” market environment, also apply to the Chinese steel industry. As a result, the industry, too, is searching for new solutions.

Shifting Gears

Over the past few decades, the Chinese economy grew at unprecedented rates, which caused a variety of problems both domestically and internationally. Rapid growth was accompanied by adverse effects, such as regional and socioeconomic inequality, environmental pollution, abuse of natural resources and overcapacity.

In the “new normal” era, China aims to address current economic and social issues while seeking growth through innovation. To achieve this goal, Xi Jinping created a five step “new normal” plan.

The first step is to adopt new technologies and business models to increase the utilization of private capital and the diversification of investment sources. The second step is to satisfy a broad spectrum of consumer demands. The third is to focus on high-tech industries to attract foreign capital. The fourth is to reinforce quality-based market competition structures. And finally, according to the five-point plan, there will be a strong emphasis on conserving resources and protecting the environment.

The Three Lows

The “new normal” era signals a major economical shift for China. The far reaching changes in the nation’s economic fundamentals are characterized by “three lows.”

The first low involves China’s steel production and consumption. Both of these areas are facing low growth, and an early peak is considered to be fast approaching, according to experts. The China Iron and Steel Association (CISA) estimates that the country’s crude steel production recorded negative growth in 2015 for the first time since 2000.

Second, steel prices have been declining steadily, due to oversupply related to overcapacity, intensified price competition and pressure from the excess supply of iron ore. China’s crude steel production led the global “raw materials super cycle” in the 2000s, but its slowdown is gradually freezing demand for iron ore.

Third, China’s steel industry is transitioning from a period of low profit to a period of zero margins. The industry’s pretax profit margin was as high as 8 percent in 2007, but the figure has barely remained above zero in recent years, recording 0.04 percent in 2012, 0.48 percent in 2013 and 0.85 percent in 2014.

Transforming China

In the new era, China’s steel industry aims to overcome crises through four major strategies. First, steel companies are actively building overseas production bases and seeking export markets to relieve domestic oversupply. Second, steel companies are pursuing survival through integration that transcends ownership schemes and regional borders.

Companies are also fostering non-steel businesses to make up for the faltering steel market. CISA estimates that China’s steel industry derived over 90 percent of its gross profit from non-steel businesses in 2013 and 2014.

Finally, the steel industry is improving profitability through advanced technology and improved product quality. Additionally, it is increasing brand power, upgrading operation technologies and making drastic changes to business models.

Developing these areas is important because, according to experts, the competitiveness of the steel industry now depends on advanced operation technologies, brand innovation and IT services more than ever.

The Future of Steel in China

A CISA representative forecasted massive transformations in China’s steel industry. Two of the major projected changes expected to occur in the next five to ten years are increased exports and entry into overseas markets. These signs of change are already visible, as the Chinese government recently opened the doors of its steel industry to foreign capital.

Exports have soared due to the depressed domestic steel market, and government policies to move steel facilities overseas are being put into effect. Experts agree that this move will have a positive impact on China’s steel industry.

The Chinese steel market is expected to expand further, as steel companies are predicted to double their efforts to increase exports and enter overseas markets. The opening of the nation’s steel industry will no doubt bring about changes for the global steel market, especially considering that China makes up half of it.

Related Link:

In Southeast Asia, Surging Imports Lead to Rising Trade Barriers

The Future of Manufacturing in Korea

The Evolution of the Steel Production Process

The Myth and Reality of Global Steel Overcapacity

POSRI Releases First Edition of Bi-Annual English Journal “Asian Steel Watch”

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World Steel Association

Formed in 1967, (then the International Iron and Steel Institute), the non-profit organization promotes steel to the industry, customers, media and the general public. Benefits of being a member of worldsteel include access to the latest technical and economic data, industry trends and performance impacting the steel industry. Members cooperate in developing programs and initiatives to drive the global common marketplace. Networking and access to events and conferences are also enjoyed by members. Worldsteel is not involved in competition of the steel industry, but rather unifying the industry on a global scale.

Steel Production by the Numbers

Worldsteel’s Steel Statistical Yearbook findings for 2015 show that Asia produces over 68 percent of the entire world’s crude steel. According to the Steel Statistical Yearbook, the four countries that produce the most crude steel are China, Japan, India and South Korea. Russia rounds out the top five. While many countries like the U.S. have decreased its crude steel production, South Korea has increased almost every year (the most recent yearbook shows data since 2005). Asia produces over 1 million tons of crude steel, and the second largest steel producing region is Europe, which produces just under 300 tons.

South  Korea produced over 71,000 tons of crude steel, 868 tons of ingots and 70,405 tons of continuously cast steel. The majority of the steel produced in South Korea uses electric furnaces or oxygen-blown converters. South Korea does not employ open hearth furnaces for steel production. In 2014, worldsteel reports that South Korea produced almost 69,000 tons of hot rolled products.

Though the largest of crude steel producing companies are located in Asia, and Asia is the largest exporter of semi-finished and finished steel products, Europe uses the most crude steel by kg per capita. Asia is by far the largest producer and exporter of pig iron, the intermediate product of smelting iron ore.

When iron is smelted from ore, it contains more carbon than desired. To form steel, the carbon must be reduced to the proper amount, at which point other elements can be added to reinforce it. In the past, steel was cast into ingots which would be stored until use in further refinement processes that resulted in the finished product. In modern processes of production, the initial product is closer to the final product through continuously cast it into long slabs, then cut and shaped to produce the final product. Continuous casting is more cost-efficient and is used in mass production and increasing the standard of quality.

POSCO Steel Production

One of five major steel companies located in Korea, POSCO is recognized as one of the world’s largest corporations by Fortune Global 500. On September 21, 2015 POSCO celebrated cumulative sales of 800 million tons since the opening of Pohang Plate Mill in 1972. Ninety-eight percent of the crude steel produced by POSCO is made through continuous casting, which replaced the process of using ingots.

For the full report, please visit worldsteel.

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The images that cross your mind may seem apocalyptic, or even impossible to fathom. There is barely a part of our lives today that is not influenced by the metal, and it is not an exaggeration to say that steel is perhaps the most significant component of the modern world. Without it, civilization as we know it would cease to exist. Let’s take a look at a few ways the world would be a different place without steel.

Skylines would be incredibly boring.

Structures such as skyscrapers and towers would be inconceivable without steel supports and cables. Therefore, buildings would be low-rise at their tallest, making densely populated cities devastatingly uncomfortable. It’s hard to imagine a world without the likes of the Burj Khalifa, the Eiffel Tower or the Empire State Building, all of which utilize steel as a main construction component.

We’d have very few options for dinner.

The food we eat today has been refined in factories with steel tools, processed with steel equipment, baked in steel ovens and preserved in steel cans. It is delivered to us via steel trains on steel rails, or by steel trucks over steel-reinforced roads. As such, in a world without steel, our food sources would be limited to what could be cultivated locally and the possibility of faminewould be persistent.

Getting in touch would take for-ev-er.

(Image source: http://bit.ly/1dgLFuc)

Without steel to manufacture telephones, computers or even mail trucks, we would be stuck relying on less than efficient carrier pigeons (which were actually a thing a few thousandyears ago) or the pony express. So much for instant connection.

Reading material would be extremely limited.

(Image source: http://bit.ly/1tNFW6q)

Newspapers, magazines and books we read today are mostly printed on a steel press. Even the paper is made from wood which is cut with steel implements and processed in steel machines. Mind you, there wouldn’t be any steel-plated pens, either, so quills would be used to write and copy the material. Of course, there might be bronze movable type printing, but it would still take a very long time and amount of patience to carry out.

Disease would run rampant.

Stainless steel has contributed greatly to improved sanitation in hospitals, restaurants and other public environments, and has helped to save the lives of millions. Easy to clean, it is more hygienic, impervious to corrosion and scratch-resistant, and is capable of standing up to harsh sterilizers, heat and heavy use, preventing deadly bacteria from surviving on its surface. Without it, the constant threat of diseases such as Ebola and measles would be very real.

Unemployment would rise and the economy would crumble.

Crude steel production reached 1.66 billion tons worldwide in 2014 which only says one thing about our world… it’s growing. It’s estimated that more than 95 countries are producing steel today, with more than two million employees worldwide, and a further two million contractors and four million people in supporting fields. Without this vital industry, the world economy would suffer and many people would be without jobs.

A glimpse into the world of steel

Fortunately, we do live in a modern world where steel does exist and its importance is clear. Yet few people tend to notice it, or understand how it works. Which is why TenarisUniversity, in conjunction with the World Steel Association’s steeluniversity, has launched the massive open online course (MOOC), “Introduction to Steel.”

This lively online learning program will feature the basics of steel melting, steel’s historical and cultural context, its relationship with society and the sustainability of a world supported by steel by utilizing everyday examples, demonstrations and film footage of steel making. Additionally, it will encourage community interactions between students and the professor.

“We believe in the highest standards of education to develop people all around the world,” Rolando Lange, Director of TenarisUniversity noted. “With this MOOC, we hope students will get passionate about steel as a material and learn about the critical role it plays in our society.”

Comprised of a four-hour framework, the course is open to all free of charge. It starts on June 2 and will run for two weeks. Registration is now open. Click here to enroll in the class, or for more information.

Just about everything – from the roof over your head to the device you’re reading this on – contains steel. It is one of the most commonly used materials in the world and has been for quite some time.

World crude steel production added up to about 1.662 billion tons in 2014, based on the 2014 World Crude Steel Production Performances reported by the World Steel Association (worldsteel). Yet despite these numbers, the outlook for the steel industry suggests slow growth for global steel demand, which is mostly a result of the deceleration in China and structural adjustments in most world economies.

Nevertheless, The World Steel Association’s Short Range Outlook (SRO) for 2015 and 2016 notes that even though the growth is expected to be slow, demand is still growing. They forecast that the apparent steel growth will increase by 0.5% in 2015 and 1.4% in 2016. Additionally, in developing and emerging nations, there is an increased optimism for growth, as the steel markets are beginning to exhibit the characteristics of mature markets.

For more information on The World Steel Association’s expected outcomes for 2015 and 2016, click here.

So, which countries claim the spots of the world’s top steel producers for now? Read on to find out and to learn some interesting steel-related facts about each.

5. South Korea

Crude Steel Production: 71 million tons

Interesting Fact:

Rising 270 meters above sea level, The Yi Sun-shin Bridge was opened in 2012 and links the cities of Gwangyang and Yeosu. It is the first suspension bridge to be made solely with Korean state-of-the-art technology and equipment, including 26,000 tons of steel rods and 24,000 tons of steel products. Extending 2,260 meters, it is the longest in Korea and the fourth longest in the world, surpassing even the Golden Gate Bridge. (Source: http://bit.ly/1crFdzx)

4. India

Crude Steel Production: 83.2 million tons

Interesting Fact:

The Lotus Temple, a Bahá’í House of Worship, is one of Delhi’s most iconic architectural feats and was designed in the form of a lotus flower to symbolize the religion’s cornerstones of purity and simplicity. The lotus has three sets of leaves or petals which are made out of thin concrete shells. At the top, a glass and steel roof provides protection from the elements and facilitates the entry of natural light. The temple also utilizes a number of steel reinforcements and structural steel staging. (Source: http://bit.ly/1zWQCTh)

3. United States

Crude Steel Production: 88.3 million tons

Interesting Fact:

In 1943, more than 1 billion pennies were made with steel because the United States was, at the time, engaged in World War II and copper was being rationed to make artillery. Steel pennies weigh 2.70 grams and are fairly lighter than traditional copper Lincoln pennies that weigh 3.11 grams. Today, these pennies are quite popular among coin collectors and are worth about 25-75 cents each. (Source: http://bit.ly/1cooLjx)

2. Japan

Crude Steel Production: 110.7 million tons

Interesting Fact:

Tokyo Tower, a communications and observation tower in Japan’s capital city, was built in 1958. It was constructed of steel, a third of which was scrap metal taken from 90 US tanks damaged in the Korean War. At 4,000 tons, it is significantly lighter than the Eiffel Tower, which weighs 7,000 tons, a result of exceptional advances in construction technology and steel manufacturing. (Source: http://bit.ly/1K3tHbS)

1. China

Crude Steel Production: 822.7 million tons

Interesting Fact:

The Chinese were the first people to combine carbon and iron to make steel. They’ve been making it since the first century BC in blast furnaces powered by the Asian monsoon winds. In recent years, they’ve become the world’s largest producer of steel, and consume twice as much steel as the US, Europe and Japan combined. (Source: http://bit.ly/1KzAKpG)

Production rates according to the World Steel Association (worldsteel) 2014 World Crude Steel Production Performances.

Pictured here: Scene from one of POSCO’s steel plants

Steel is one of the most common and useful metals. But do you know how it is actually made? Let’s go behind the scenes of one of the world’s leading steelmakers, POSCO, to discover the process of how steel is made.

Pictured here: Gwangyang Works is a world leading works with optimal layout to specialize in the production of automotive steel

The 3 Step Steelmaking Processes

For easier understanding, steel is made through 3 different stages which are ironmaking, steelmaking and rolling (continuous casting processes).

1)      Ironmaking: a process of smelting iron ores into hot metal.

Iron ore and coal are gathered from all around the world and unloaded onto the raw materials dock.

Pictured here: Dock where iron ore and coal are gathered

For proper heat transfusion in the blast furnace, iron and coal must be solidified from their powder form. The process of solidifying iron and coal is called sintering and coking, respectively. The pretreated iron and coal are stacked into layers in a 100m tall blast furnace. Then hot air at 1,200 degrees Celsius is blown into the furnace, causing the coal to burn which melts iron ore into molten iron.

Pictured here: 100m tall blast furnace where iron ore melts into molten iron

 2)      Steelmaking: a process of removing impurities from hot metal to create crude steel.

The molten iron created in the blast furnace contains various impurities that diminish its strength and durability once it is hardened into steel. The molten iron from the blast furnace is transported into a torpedo car and poured into a converter furnace.

Pictured here: The molten iron from the blast furnace is transported into a torpedo car to be taken to a converter furnace

In the converter furnace, pure oxygen is added to burn off substances such as carbon, phosphorous and sulfur to create purified molten steel. At this point, the temperature and substance composition is precisely adjusted to customer’s various demands.

Pictured here: Molten iron being poured into a converter furnace to be purified

Pouring the molten steel into molds and cooling into solid creates a semi-finished material called slabs which are used to make finished steel products.

Pictured here: Molten steel being created into slabs

Solid steel is categorized based on shape. Slabs are wide and flat. Blooms are rectangular bars and billets are thinner, square bars.

3)      Rolling: a process of pressure forming crude steel into various finished products.

The final stage of the steelmaking process involves continuous casting where steel is forged into various steel products. Through the process of rolling, steel can be treated differently to be put to a variety of uses.

Pictured here: Slabs being passed between rollers to turn crude steel into finished products

What is steel used for?

POSCO steel products are used in every part of our daily lives ranging from buildings to smartphones to satellites in space.

The different types of products that can be created include:

1)      Hot-rolled products

2)      Cold-rolled products

3)      Coated Steel

4)      Electrical Steel Plates

5)      Steel Plates

6)      Wire Goods

7)      Stainless Steel

Read on to find out more about the steel products around us.

Hot-rolled products are made from slabs passed through rollers above 1,100 degrees Celsius. These are used for construction materials and pipes in various industries.

Cold-rolled products which are created by making hot rolled products thinner at room temperature are used in general appliances, barrels and automobile frames.

Coated steel which is created by coating cold rolled products with zinc are used in high end appliances, office equipment and automobile exteriors. 

Electrical steel plates are created by adding electrical properties are used in transformers and motors. 

Steel plates which are thick and rectangular in shape are used in large structures such as buildings, vessels and oil pipelines. 

Wired goods are created when billets are passed through a roll with a round hole and is used for automobile tire cords, wires for bridges, piano strings, underwater cables and more. 

When nickel and chrome are added to steel it produces stainless steel which are used in kitchen appliances, medical equipment, exterior walls and roofs of buildings. 

POSCO Ushers in Era of New, Eco-friendly Technologies 

Pictured here: Pohang Works, the root and heart of the Korean steel industry.

POSCO was the first in the world to use a more economical and eco-friendly method of steelmaking compared to a blast furnace. The FINEX method uses iron ore and coal in its original form, skipping the coking and sintering processes. 

Pohang Works is driving innovations in steel technology and leading in production of high quality products. It operates a state of the arts R&D center and production monitoring center that monitors production 24/7. 

In addition, there is an Environmental Center that monitors emissions of pollutants in real time. 

Click on the videos below to see the full steelmaking process at POSCO’s Gwangyang Works and Pohang Works, the root and heart of the Korean steel industry.