POSCO continues to contribute to the growing steel industry by producing large amounts of high-quality steel for its partners, and has its sights on non-steel businesses as well. The continued efforts to stay ahead of global trends, provide solutions to partners as well as to produce the highest quality steel are what keep POSCO in the top ranks.

Here are 6 more memorable highlights from 2017 so far.

1. POSCO’s First Lithium Extraction Plant

On February 7th, POSCO opened its first lithium extraction plant, PosLX at Gwangyang Works in Korea. It is expected to produce 2500 tons of lithium carbonate per year, making POSCO the first company to produce lithium on a commercial scale in Korea.

The opening ceremony of PosLX

Traditionally, the process of extracting lithium takes 12 to 18 months. In comparison, POSCO’s new, sustainable technology only requires as little as 8 hours up to a maximum of one month to extract high-purity lithium. The materials produced at PosLX will supply LG Chem, Samsung SDI and POSCO ESM, a subsidiary company that specializes in cathode materials for secondary batteries.

2. Leading Supplier of Electric Steel Plates

On February 20, POSCO opened its newly-expanded, non-oriented silicon steel facility for producing environmentally-friendly electric vehicle drive motors. The expansion increased POSCO’s output of non-oriented silicon steel (Hyper NO) from 80,000 to 160,000 tons, making POSCO the leading supplier of electric steel plates both domestically and internationally.

POSCO CEO Ohjoon Kwon at the non-oriented silicon steel facility (Source: MK News)

The demand for environmentally friendly vehicles is growing, and with it the demand for top-grade electric steel plates. In 2020, the projected demand for such parts will reach more than 1 million tons. POSCO has its eyes on the market, aiming to develop high-quality, customized materials for electric vehicle manufacturers.

3. Release of POSCO’s GIGA STEEL Ad

In March, POSCO ran a nationwide TV ad for POSCO GIGA STEEL in Korea to showcase the superiority of POSCO’s next-generation automotive steel material. This is the first time POSCO put out a specific steel product and not the company brand at the forefront of an ad campaign. In order to convey the strength and light weight of the product, the advertisement included a strength test comparing GIGA STEEL to aluminum. The test proved POSCO GIGA STEEL to be over three times stronger than aluminum.

4. Commercialization of a High Manganese Steel Production Technology

In April, POSCO commercialized the world’s first high manganese steel production process technology using molten manganese ferroalloy (FeMn). This technology takes place at PosLM (POSCO Liquid Manganese), a heat insulation facility that can store high-purity molten ferromanganese alloy. The technology boosts profitability by reducing the processing time by half and increasing production efficiency by more than 10 percent using a non-solid type of molten iron.

Hot Liquid Steel

5.  Completion of 7CGL for POSCO GIGA STEEL

On April 26, POSCO completed the world’s first steel plate factory specifically for GIGA STEEL. 7CGL, which has an annual production capacity of 500,000 tons, is attracting attention as the world’s first factory to produce both GA (hot-dip galvannealed) and GI (hot-dip galvanized) steel plates among 1.5-class automobiles. POSCO secured its position as a global automotive steel plate maker through the completion of 7CGL, its 12th steel plate factory. POSCO has been able to reduce investment costs and secure cost competitiveness by carrying out both factory design and construction internally.

Opening ceremony for 7CGL (Source: Business Korea)

6. Completion of POSCO’s Steel Forming Laboratory

On May 11, POSCO completed their Steel Forming Laboratory at the POSCO’s Global R&D Center in Songdo, Korea, built to provide customized support for partners. POSCO is building a one-stop development system from technology development to production verification. At the core of this program is the advanced customer-oriented research infrastructure that can evaluate products in advance and develop leading technologies in a production environment similar to that of POSCO’s customers. This development will further strengthen POSCO’s solution marketing 2.0.

The Steel Forming Laboratory at POSCO’s Global R&D Center

Despite a difficult market environment, POSCO continues to provide high-quality steel products for its partners through close cooperation and customized research. Additionally, POSCO’s expansion into non-steel sectors will not only bring added value, but help POSCO stay ahead of the changes the fourth industrial revolution will bring.  

Consolidated sales slightly increased from the previous quarter while the operating profit ratio increased from 3.1% to 9.1%. Thanks to the increased profits of the steel division, as well as the improved performance of its non-steel divisions, such as trading and engineering & construction (E&C), POSCO’s operating profit increased by 189.4% from the previous quarter.

The aggregate operating profit of the steel division increased by 60.8% to KRW 1.0234 trillion while the aggregate operating profit of the trading division increased by 60% to KRW 126.7 billion. POSCO’s steel subsidiaries saw improved performance, helping overall operating profit. The E&C division also saw profits increase by 26.7% from the previous quarter to KRW 75 billion.

The operating profits of Zhangjiagang Pohang Stainless Steel (ZPSS) in China increased by 41.7% to KRW 52 billion while the operating profits of India POSCO Maharashtra increased by 80% to KRW 38.7 billion. Additionally, operating losses greatly decreased at PT Krakatau POSCO and Vietnam POSCO SS-VINA.

Compared to the previous quarter, the sales profit of POSCO increased by 9.7% to KRW 7.0674 trillion and the operating profit of POSCO increased by 63% to KRW 795.4 billion, resulting in a net profit of KRW 839.6 billion.

Due to the expansion and repair of Pohang blast furnace No. 3, production and sales volume slightly declined from the previous quarter, but the share of sales of its World Premium Products (WPP) increased from 2.4% to 53.4% compared to the previous quarter. Due to increased sales of higher value-added products, reduced costs, continued efforts to improve profitability, and the rise in steel prices, the operating profit ratio increased from 3.7% to 11.3% from the previous quarter.

POSCO’s debt-to-equity ratio has dropped to 17.6% separate and 71% consolidated, a 1.6%  and 6% decrease, respectively, from the previous year.

POSCO has also been moving forward with its restructuring efforts since the inauguration of CEO Ohjoon Kwon and aims to reduce the number of domestic affiliates from 49 to 32 by the end of this year. POSCO plans to secure the future of the company for the next 50 years by laying the groundwork of integrating smart technologies with the core competencies of the Group.  

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From left to right: Seong Yu, VP of POSCO; Young-hoon Lee, CEO of POSCO Chemtech; Dae-woo Lee, employee representative of the labor-management committee; POSCO CEO Ohjoon Kwon; Won-ho Choi, Chairman of Taehwa; In-hwa Jang, VP of Taehwa; and Tong-il An, General Manager of Pohang Steel Works.

With the completion of the project, POSCO’s top-grade non-oriented silicon steel (Hyper NO) production has increased from 80,000 to 160,000 tons, which is enough to supply parts for approximately 2.6 million electric vehicle drive motors.

Electric steel plates are made by adding 1-4% silicon to iron. They possess excellent electromagnetic properties and consist of high-grade steel material. Depending on the crystallographic direction of the metal, they are categorized as either grain-oriented silicon steel or non-oriented silicon steel. Grain-oriented steel is used as a material for the core of stators like transformers, whereas non-oriented silicon steel is used as a material for rotors like motors and generators as it contains nearly identical electromagnetic properties in all directions.

This capacity expansion project successfully met its goal of producing more top-grade non-oriented silicon steel, which is a core ingredient in high-efficiency premium consumer electronics and electric vehicles. It is an environmentally-friendly material that saves energy and reduces CO2 emissions.

POSCO CEO Ohjoon Kwon encourages employees to continue striving towards becoming a leader supplier of high-quality, non-oriented silicon steel.

As demand for environmentally friendly vehicles and high-efficiency consumer products continue to increase, the demand for top-grade electric steel plates (the materials for core parts) is also expected to rise from last year’s 800,000 tons to more than 1 million tons in 2020. POSCO aims to increase its market share by developing customized products for individual electric vehicle manufacturers and providing specialized services. As the quality of consumer electronics improves at home and abroad, POSCO is hoping to see a spike in profit through increased sales of its top-grade non-oriented steel and premium-grade materials for high-efficiency motors.

This project required an investment of KRW 124.1 billion and helped boost the local economy as a total of 200,000 construction workers were employed during the construction period. POSCO was also able to reduce the total cost of the project by shortening the construction period, recycling equipment, and optimizing the design.

POSCO CEO Ohjoon Kwon said, “With the completion of this project, POSCO is now able to proactively meet the increasing demands for environmentally-friendly cars and high-efficiency premium consumer electronics. We will continue to do our best to give our customers top-quality electric steel plates and lead the premium market with technologically-advanced, high-quality products. ”

With the successful completion of the high-grade material capacity expansion project, the installation of additional equipment, and a stable production system, POSCO is now better equipped to meet domestic and overseas demands for non-oriented silicon steel.

This project is just one of many that POSCO has carried out in order to secure its position as a leading supplier to meet the needs of the ever-expanding high-efficiency premium consumer electronics and electric vehicle market. Other projects have included making improvements to the APL (Annealing & Pickling Line), ACL (Annealing & Coating Line), and the ZRM (Sendzimir Reverse Mill), which is capable of producing 0.15mm steel sheets. This particular project resulted in the production of 0.15mm electric steel plates, which contributes to minimizing power loss in customers’ end products.

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However, due to the successful management of POSCO’s overseas subsidiaries, the combined performance of the group improved significantly. By focusing on sales of high value-added products based on solution marketing, engaging in extensive cost-saving efforts, and generating revenues via the “Innovation POSCO Project”, POSCO was able to deliver a two-digit profit margin and a more than 50-percent jump in stock value.

By continuing this work in 2017, POSCO is determined to maintain its position as a leader in the global steel industry.

POSCO’s Vision for 2017

In 2017, further improvements in the global steel market are likely as the global economy continues its recovery. Also, improvements are expected in the supply-demand imbalance as China is expected to slightly reduce steel production.

In 2017, POSCO plans to further the success seen in 2016 and continue to lead the steel industry through innovation and continuous improvements of its World Premium Products.

However, the spread of trade protectionism across developed and developing countries alike, is expected to create potential barriers for POSCO’s export environment. Moreover, competing mills have been accelerating consolidation and expansion to maintain their dominance in their respective local markets while also focusing on the development of high-end products. All of these factors point to ever intensifying competition both in terms of quantity and quality.

To remain competitive with other leading global players in 2017, POSCO plans to solidify its profitability by completing its restructuring process as part of Innovation POSCO 2.0 and strengthening its foundation for future growth.

In CEO Ohjoon Kwon’s 2017 New Year’s message, he marked the steps that must be taken in 2017 to accomplish these goals. First, POSCO must continue upgrading its steel business with proprietary technologies. Second, the business structure of POSCO Group should be continuously restructured to improve efficiencies in low-profit businesses. Third, future growth must be ensured by strengthening competencies based on “Smart Solutions.” And lastly, POSCO must continue its work to establish a flexible and creative corporate culture that excels in the 21^st century.

Despite all of the aforementioned challenges facing the steel industry, POSCO has continued to be a leader. Through innovation and a strong focus on improving the quality of its World Premium Products, POSCO is again well-positioned to lead the industry in 2017 – and in the years to come.

In the journal’s last installment of a special four-part series on Industry 4.0, Dr. Kyeongchan Kim, POSCO’s Vice President of Corporate Strategy Development, delves into the impact of e-commerce in China’s steel industry.

China’s Industry 4.0

When the “dot-com” frenzy took over the world in the late 1990s, the first steel e-commerce boom began, with major steel-producing countries such as the USA, Japan, European-countries and Korea leading the trend.

However, this wave was short-lived. Transactions reflected inadequacies between online and offline steel trade, and entry barriers were raised for traditional distributors.

Fast forward ten years later, and a second steel e-commerce boom begins in China. The rapid growth in China’s steel e-commerce can be attributed to three factors: the receptive landscape of the country’s steel trading market due to an industry slump; the “Internet Plus” and the “Made in China 2025” policies; and a growing desire for online expansion across the industry.

In 2015, the number of participating platforms in steel e-commerce in China and trade volumes have almost doubled from 2014’s statistics, characterizing the exponential rise in online steel sales.

E-Commerce Boom

Unlike other major steel producing countries, however, experts are claiming that China’s market has distinctive features that differentiate it from being a passing fad, like the previous boom.

Profitability has been a major concern for Chinese steelmakers, as the number of steel manufacturers and distributors has grown independently, creating fierce competition and adding to the country’s oversupply of steel.

Therefore, many companies have turned to e-commerce to increase their clout, while distributors, venture capitalists and information consultants have utilized this strategy to reinforce their footholds in the market and pursue new business opportunities.

Currently, there are five steel firms in China that account for 90% of the total steel e-commerce trade: Zhaogang, Banksteel, Opsteel, Xinyilian and Ouyeel.

Future Sales Overseas

In the future, it is predicted that China’s steel e-commerce market will be led by a few firms, which will eventually restructure the overall steel industry in China. Oversupply will be gradually reduced, fledgling and floundering businesses will close and the economy will stabilize.

The Chinese government is an influential presence in this restructuring, and aims to increase the total steel trade through e-commerce by about 20%, or 150-200 million tons.

Currently, most of China’s steel e-commerce firms are trying to shift the model of inventory sales to order sales to expand the implementation of the “Made in China 2025” and “Internet Plus” policies, upgrading their general steel products to those of higher quality.

To broaden their sales channels, major Chinese steel e-commerce companies are branching out to export in other countries, such as Korea, Vietnam, Thailand and Dubai.

Steady Climb in Emerging Markets

If China’s Industry 4.0-style policies do take hold in the steel industry, its steel e-commerce will most likely be more than just a fad. The size of the market, business opportunities and profitability especially reflect this trend’s direction.

By first focusing on becoming the main distribution channel for general steel products domestically, China’s e-commerce firms will incrementally take hold of overseas markets, particularly emerging ones.

Chinese platforms understand that steel e-commerce will not spread as quickly abroad as it did in their own country, and will seek gradual expansion through traditional and digital business integration.

Building exteriors and roofs are the most visible parts of buildings, while also being the most vulnerable to corrosion. Materials used in their construction should be both corrosion-resistant and aesthetically pleasing, which is why stainless steel has become a popular option for materials in a building’s exteriors.

POSCO recently signed a deal to supply 380 tons of its 446M stainless steel for the expansion of the Incheon International Airport Passenger Terminal, and 120 tons of its 329LD stainless steel for the construction of the Kwandong Hockey Centre .

A bird’s-eye view of the second passenger terminal at Incheon International Airport. Because of its non-corrosive properties and stylish appearance, POSCO’s 446M steel will be used as an exterior material.

Incheon International Airport, the #1 in airport service quality for the last 10 years, is moving forward with construction to build its second passenger terminal to accommodate for an increase in passengers. The first passenger terminal was built in 2001 using POSCO’s 446M steel, and after 18 years, few signs of corrosion have been seen. Therefore, when planning for the second terminal, they decided to use the same type of steel along with the application of the Bead Blast process that will create a rough texture on the roof to lower the reflectivity rate for aircraft pilots during take-offs and landings.

POSCO’s 446M steel contains high amounts of chromium (26%) and molybdenum (2%) that give it superior corrosion resistance for use in exterior construction near coastal areas, like Incheon. In addition, the minimization of carbon and nitrogen make the steel easier to weld and process. Because of its low thermal expansion coefficient (the ratio of the thermal expansion of an object to temperature under a constant pressure), it is possible to make longer panels, especially when compared to materials such as aluminum or the 300 series stainless steel.

POSCO’s 329LD steel was applied to the exterior of the recently-built Kwandong Hockey Centre in Gangneung, Korea.

POSCO’s Lean Duplex 329LD steel was applied to the exterior of the Kwandong Hockey Centre , which will host events and athletes from all over the world in February 2018. The stadium is located only 7km away from the coast and it was required that the steel have at least 316L-grade corrosion resistance. Because of budget overrun concerns, POSCO recommended its Lean Duplex 329LD steel. Its corrosion resistance is above that of the required 316L steel, and because of its high strength, thinner applications of the steel could be used in the final design. In addition, vibration surface treatment was applied in order to add texture to the surface of the exterior, giving the building a more modern touch.

POSCO is also working to expand the sales of its stainless steel products in the global market. POSCO recently signed an agreement with a multipurpose apartment complex in Vancouver, Canada, and more are expected soon. Because of its corrosion resistance, beautiful aesthetics, high strength, ease of maintenance, and fire resistance, the popularity of stainless steel is expected to continue rising with architects, engineers, and the general public.

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The MOU-signing ceremony was held on October 17 in the POSCO magnesium plate factory in the Haeryong Industrial Complex in Suncheon. Approximately 20 people were present, including National Assembly member Jeonghyeon Lee, the governor of Jeolla-namdo Nakyeon Lee, the mayor of Suncheon Choonghoon Cho and POSCO CEO Ohjoon Kwon.

POSCO and Suncheon, Jeolla-namdo entered into an MOU on October 17 to expand the number of magnesium production facilities. Third from the left, National Assembly member Jeonghyeon Lee, governor of Jeolla-namdo Nakyeon Lee, POSCO CEO Ohjoon Kwon and the mayor of Suncheon Choonghoon Cho.

According to this MOU, POSCO and Suncheon will join forces in the purchase of a lot and the expansion of the facilities for producing automotive wide magnesium plates. They will also work side by side in transforming the Haeryong Industrial Complex into a light materials industry cluster by fostering and actively supporting magnesium-related SMEs.

Magnesium is in the spotlight as an ultra-light material that is lighter than aluminum and steel. As environment-friendly issues have emerged in the automotive industry, POSCO has focused on developments with magnesium, as it can be more effective than aluminum in terms of weight reduction. POSCO completed the magnesium plate factory in Suncheon in July 2007, and has since been producing and supplying alloy plates to domestic and overseas automakers and electronics companies.

POSCO’s magnesium was applied to Renault’s concept car ‘EOLAB,’ which was unveiled at the Paris Motor Show in October 2014. The roof of a standard car weights about 10kg, but the roof of ‘EOLAB’, which is made from POSCO’s magnesium plates, weighs about 4.5kg, and has accordingly attracted public attention.

POSCO is planning to capitalize on this expansion to preempt the anticipated increasing demand for magnesium for foreign automobiles, and become the first to make a move in the global market.

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