Chairman In-hwa Chang: “I extend my deepest gratitude to all POSCO Group employees who made today’s honor possible··· We will leap forward as a global premier materials company through bold challenges and innovation”

Discusses manufacturing AI transformation and solutions to global economic fragmentation with opinion leaders, experts, and scholars at the Korea Society roundtable, exploring Korea-U.S. cooperation opportunities

POSCO Group announced its strategy for strengthening global leadership in New York, exploring manufacturing solutions through cooperation between Korea and the U.S. in the AI and energy sectors.

Chairman In-hwa Chang participated in the Global Steel Dynamics Forum hosted by World Steel Dynamics (WSD, a global steel industry analysis organization) in New York on June 18 (local time), introducing POSCO Group’s strategy for advancing as a premier future materials company.

The event was attended by steel industry leaders and approximately 500 industry stakeholders, including David Burritt, CEO of U.S. Steel, Lourenco Goncalves, Chairman of Cleveland Cliffs, and TV Narendran, CEO of Tata Steel.

The forum was made particularly meaningful with a ceremony inducting POSCO Holdings as the first global steel group to be permanently enshrined in the WSD Hall of Fame.

▲POSCO Group Chairman In-hwa Chang (left) poses for a commemorative photo after receiving a specially crafted WSD Hall of Fame plaque in the form of a baseball jersey from WSD CEO Philipp Englin at the WSD Forum held in New York on June 18 (local time).

POSCO Holdings has been ranked first for 15 consecutive years since 2010 in WSD’s “World’s Most Competitive Steel Company” evaluation, which has assessed 35 steel companies worldwide since 2002 across 23 criteria, including technological innovation, production scale, cost reduction, processing costs, financial soundness, customer accessibility, and raw material procurement. The company was inducted into the Hall of Fame in recognition of this honor and superior competitiveness.

Chairman Chang expressed his sentiments, saying, “The 15 years of maintaining first place in overall competitiveness is by no means a short period, and I am deeply grateful for the valuable sweat and dedication of all POSCO employees.” He also conveyed his appreciation, noting that “the Hall of Fame induction represents encouragement and support from the global steel industry.”

He emphasized that this induction marks the beginning of a new chapter for the POSCO Group, which will continue its relentless efforts to enhance competitiveness through the realization of intelligent factories via AI and the development of hydrogen-based steelmaking technology, becoming a POSCO that grows responsibly through a bold and challenging spirit and continuous innovation.

Prior to the forum, Chairman In-hwa Chang participated in a roundtable organized by The Korea Society, an organization established to promote mutual understanding and cooperation between Korea and the United States, on June 17 to explore Korea-U.S. cooperation strategies centered on group businesses.

The roundtable was attended by experts and scholars from both countries in the fields of AI, geopolitics, and energy, including Korea Society Chairwoman Kathleen Stephens, President Thomas Byrne, University of Maryland Chair Professor Jay Lee, and American Energy Alliance President Mark Menezes.

The session featured in-depth discussions on Korea-U.S. cooperation opportunities in the steel, secondary battery materials, and energy sectors amid geopolitical uncertainties, including global economic fragmentation.

Additionally, practical solutions were explored to address challenges facing manufacturing during the AI transformation era, including the utilization of the “Industrial Large Knowledge Model (ILKM)” that enhances reliability by integrating expert process knowledge and data from various fields into AI, as well as robot automation solutions for high-risk, non-standard manufacturing environments.

In April, Chairman In-hwa Chang attended the World Steel Association Executive Committee meeting in Australia, inspected the Senex Energy gas field project site in Australia, and visited the construction site of Ultium CAM, a cathode material production subsidiary located in Canada, to personally oversee global secondary battery materials business operations. In May, he participated in the opening ceremony of Australia’s Core Resources Research Institute, the first overseas resource-specialized research institute established by a Korean company, continuing his global management activities centered on steel and secondary battery materials businesses.

Achieves a Perfect Score of 10 in Six Key Areas, Including Technological Innovation, Processing Cost, and Upstream and Non-Steel Businesses

WSD Highly Commends POSCO’s Carbon Reduction Efforts, Including the Vision of “Better World with Green Steel”

POSCO has achieved a remarkable accomplishment by securing the top spot as the most competitive steelmaker globally for the 14th consecutive year.

World Steel Dynamics (WSD), a well-known global steel analysis institution, revealed the results of its World-Class Steelmaker Rankings on December 18 (local time in New York).

Facing tough sales conditions such as a slowdown in domestic demand and growing global trade issues, POSCO successfully overcame these challenges and accomplished the formidable task of fully normalizing operations after the Naengcheon River flood. The company scored the highest in six categories, including technological innovation, processing costs, workforce capabilities, mergers and acquisitions, national risk, and upstream and non-steel industries, ranking first overall with 8.62 out of 10 points.

Founded in 1999, WSD evaluates 35 of the world’s leading steelmakers based on 23 criteria, including technological innovation, cost reduction, processing costs, financial stability, customer accessibility, and raw material accessibility, and has published comprehensive annual competitiveness rankings since 2002. These rankings are an essential reference point for assessing the management performance and future potential of major global steel companies.

WSD clarified that POSCO’s remarkable score is attributed to its vision of “Better World with Green Steel” and its efforts in carbon reduction steel production.

The company was also named the Sustainability Champion by the World Steel Association for two consecutive years in April and was awarded in the “Sustainability” category at the Steelie Awards in October.

At the first Breakthrough Technology Conference organized by the World Steel Association in Abu Dhabi, UAE, on December 5, POSCO shared information about its carbon neutral strategy and unique hydrogen reduction ironmaking technology, HyREX. POSCO discussed the current status of its development, as well as low-carbon bridge technologies, which demonstrates its leadership in promoting carbon neutrality in the global steel industry.

▲ Stainless steel cold rolled coil products produced at POSCO Pohang Works.

As the only global institute who quantifies a company’s competitiveness using objective indicators, WSD evaluates the competitiveness of top 34 steel companies around the globe based on the 23 criteria ranging from technology, innovation to the environment – seven of which POSCO achieved perfect scores.

WSD’s report is a crucial indicator that can help predict the potential and performance of the companies. What is the secret sauce for POSCO’s unwavering competitiveness? POSCO Newsroom presents, ‘The POSCO Way.’

Since 2002 when the annual WSD’s ranking announcement began, POSCO had securely retained first place for three years until 2004. Albeit its slight dip to second place from 2005 to 2009, POSCO has ascended yet again, attaining world’s most competitive steelmaker for the ninth consecutive year since 2010.

ㅣWSD Steelmaker Ranking Progress from 2002 to 2018

Despite unsteady rankings of worldwide prominent steelmakers ranging from third to tenth, POSCO’s enduring position as first and second place reflects POSCO’s staunch management and firm commitment amid complicated management conditions over the last 17 years.

WSD has the following total of 23 criteria for evaluating steelmaker competitiveness:

ㅣWSD Evaluation Standard

Based on the 10-point scale, WSD determines each factor with a weigh, and then weighted average in the final stage to pull off the ranking score. POSCO was first to exceed the 8-point scale average in 2014. Subsequently, landing first place meant reaching from high on the 7-point scale to 8-point scale.

POSCO won perfect points in the eight evaluation categories including cost-cutting efforts, harnessing tech revolution, downstream business, and skilled & productive workers. High scores were received in pricing power in the home market, profitability, size, and expanding capacity categories.

POSCO has undergone about 150 intensive restructuring for three years since 2014, achieving close to 6.3 billion US dollars (7 trillion won) in cumulative financial improvement. And the company’s earnings at both its domestic and overseas subsidiaries have turned into surpluses, laying a steady foundation for future prospects. In like manner, profit continues to grow as the margin exceeds 7%, and debt ratio remains at the industry’s lowest level of 60%.

POSCO’s advancement in the 4th Industrial Revolution is highly anticipated with expanding sales of WP(World Premium) products through adopting Solution Marketing, and in accelerating the completion of total solution business portfolio from vehicle components to networking systems. Moreover, strategies to implement smartization of factories and marketing them as solution package are under way.

ㅣPOSCO’s Exclusive Future Strategy

Having maintained world’s top position withstanding severe recession caused by surplus over the past three to four years, this stance is reflected in this year’s WSD ranking and is expected to continue.

POSCO has been recognized as the leading company among the world’s top steelmakers for the past eight consecutive years. To note, POSCO received this year’s honor in the midst of difficult domestic and overseas market conditions due to last year’s global oversupply, tighter import regulations triggered by the spread of protectionism and internal financial restructuring.

The Steel Survival Strategies held discussions on current trends and future strategies of the global steel industry before the WSD announced the honor. Thirty-seven steel companies around the world were evaluated on 23 different criteria such as production scale, profitability, technological innovation, price competitiveness, cost reduction, financial soundness and raw material acquisition.  

POSCO has topped the list a total of 13 times since 2002, when WSD first began its global competitiveness rankings, putting POSCO at the top of the rankings for the longest period of time.

POSCO came out on top with a perfect 10 in five categories: technological innovation, cost reduction, labor skills, restructuring and investment environment, putting the overall score at 8.31 points. The total was 0.26 points higher than last year, due to positive evaluations of POSCO’s solutions marketing activities, the expansion of high-value-added products as well as its financial restructuring.

Other notable companies on the list include Russian steelmaker Severstal (second place) for iron ore and coal mines, US steelmaker Nucor (third place) for their technological innovation and profitability, NLMK steelmaker (fourth place) for their iron ore, and NSSMC (fifth place) with positive evaluations in business diversification and restructuring.

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Now some experts claim that the steel industry cannot avoid a long-term recession without resolving the issue of global steel overcapacity. As a result, overcapacity has become a hotly debated and contentious issue.

Calculating Overcapacity

One of the major difficulties in determining the level of overcapacity is the calculation process. The report states that to calculate the extent of overcapacity, an accurate measure of capacity is necessary. However, the common method of calculating overcapacity by using nominal capacity is likely to yield exaggerated figures. This happens because it is physically impossible for plants to operate year-round at 100% nominal capacity, due to various issues such as raw materials supply, facilities maintenance, and the existence of outdated facilities.

Nominal Overcapacity Rate Relative to Steel Demand

The only way to accurately calculate capacity at the highest possible operation rate, known as effective capacity, is by investigating every single steel plant around the world. As you can imagine, this type of study is practically impossible. However, we are getting closer to a more accurate study.

Effective Capacity

In recent years, the Organization for Economic Co-operation and Development (OECD) has perfected its method of quantifying the effective capacity of member states. The OECD bases maximum production on peak market condition during a certain period. The market condition is estimated with consideration to factors such as steel production, price, and profitability.

Using effective capacity to estimate the maximum possible production of steelmakers yields a smaller magnitude of overcapacity. The introduction of effective capacity measurement can potentially dispel worries about overcapacity causing stagnation or recession in the steel market.

Steel Prices and Overcapacity Rate

From 2008 to 2014, global nominal overcapacity increased steadily in size, but demand also grew. According to the report, the degree of nominal overcapacity relative to demand size fluctuated, following the peaks and valleys of steel prices. These findings support the argument that stresses the importance of effective capacity and disregards nominal capacity as a meaningless figure. Hence, some experts refer to overcapacity as a myth because we have yet to learn the exact magnitude of overcapacity and its impact.

Despite this idea of myth and exaggeration, overcapacity is considered the most challenging issue for today’s global steel industry. For this reason, relieving overcapacity remains an urgent issue and it requires the attention and efforts of the global steel industry.

The Reality of Overcapacity

Dr. Rod Beddows, author of Steel 2050, published in 2014, pointed out that “While efforts to reduce capacity are important, the continuous growth of steel demand is essential in lowering overcapacity rates.” One of the biggest concerns in the steel sector today is the future of Chinese demand and supply. But according to Dr. Beddows, we don’t have to worry because Chinese steel demand has not peaked yet. He claimed “There are still over 300 million Chinese requiring industrialization and urbanization. The housing and general building stock needs replacement.” And of course all of this development involves steel products.

Dr. Beddows admits that “Current overcapacity in China is large,” but he stated that “growth plus Xi Jinping’s new policy initiatives for China’s infrastructure and manufacturing will lead to its rapid decline, and by 2017-2018 supply and demand should be in balance.”

Meanwhile, the report states that investment in infrastructure and the growth of the manufacturing sectors in emerging countries such as India and the Middle East is important in creating steel demand, and might offset China’s declining steel demand in the future. However, the global economy has not shown clear momentum for recovery since the financial crisis, and concerns are mounting over a slowdown in the Chinese economy.

Overcoming Overcapacity

No matter how you look at it, overcapacity is a problem and a recurring one at that. Dr. Beddows claimed that “The only way to manage this problem is to create a level playing field in terms of ownership, by eliminating state ownership, and trade in the industry. Regulation in general is also of increasing importance.”

Dr. Beddows suggested ways that the industry can remove state ownership. He said, “Price risk hedging mechanisms and improved service levels to customers are the two most important issues for the industry. I recommend that organizations such as World Steel Dynamics focus on these to help the industry improve.”

So it seems that overcapacity is becoming a reality, but the situation is not as dire as many think. It is possible to overcome the challenge of overcapacity if the Steel industry works in unison to reduce unnecessary excess capacity.

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The announcement distinguished POSCO as the world’s top steelmaker for the eighth consecutive time in six years. 

The WSD evaluated 36 steelmakers from all corners of the globe in 23 categories including production capacity, profitability, technological innovation, cost competitiveness, cost savings, financial stability, and procurement, as of June 2015.

As a result of focusing on the enhancement of core corporate competitiveness by growing the sales of high value-added premium products and solution marketing founded on technology, POSCO acquired an average of 7.91 points, with a maximum score of 10 points in technological innovation, putting the Korean steelmaker at the No.1 spot. 

According to the WSD’s rankings, following POSCO was the second-ranking American mini-mill steelmaker Nucor Corp., having reaped the benefits of the shale gas developments that coincide with the recent recovery of the steel market in industrialized nations. Nippon Steel and Sumitomo Metal of Japan ranked third, demonstrating rising sales related to increased export competitiveness under the Abenomics policies. Brazil’s Gerdau came in fourth, followed by Severstal of Russia. Hyundai Steel of Korea ranked ninth for the second consecutive year. 

During the Steel Success Strategies forum, which was held under the theme “Just the Beginning,” it was forecasted by the WSD that the global steel industry would continue at its current slow pace for some time after assessing the short-term market conditions from 2015 to 2017. On the bright side, the organization noted that the global steel industry should recover some momentum and see improvements in the raw materials market from 2017. This, of course, is uplifting news as POSCO continues to move forward.

Top 10 Rankings of World-Class Competitive Steelmakers 

1 POSCO (Korea) 7.91 
2 Nucor (U.S.A.) 7.55 
3 Nippon Steel & Sumitomo Metal (Japan) 7.49 
4 Gerdau (Brazil) 7.34 
5 Severstal (Russia) 7.31 
6 JSW Steel (India) 7.20 
7 NLMK (Russia) 7.14 
8 JFE(Japan) 7.104
9 Hyundai 7.05
10 Erdemir 7.03

Pictured here: POSCO steel mill employee juxtaposed with steel production

Let’s take a look back at how POSCO came to be the foundation of the nation’s steel industry as well as one of the most respected companies!

 Founding Period: 1965~1969

Pictured here: 1965.12 – Four countries including U.S. & U.K. convene to establish KISA / 1967.7 – Pohang is selected as site for steel mill / 1967.11 – Steel Industry Committee is established

The growth of POSCO happened at the same time as the growth of Korea. The 1960s was a period when poverty and chaos plagued the nation. However, through steadfast hard work and perseverance, steel became the foundation of a strong economy. Just three years after the launch of Korea International Steel Association (KISA), POSCO was born in 1968.

Establishing Pohang: 1970~1981

Pictured here: 1976.5 – Pohang Works under construction / 1978.12 – Phase 3 of Pohang Works construction completed / 1981.2 – Phase 4 of Pohang Works construction completed

Building steel mills was a daunting task but that did not deter POSCO from finishing it. Through four stages of construction, Pohang Works was completed. For more information on Pohang Works check out our previous post

Establishing Gwangyang: 1982~1992

Pictured here: 1985.3 – Beginning of Gwangyang phase 1 construction / 1978.12 – Establishment of Pohang University of Science & Technology / 1987.5 – Phase 1of Gwangyang Works construction completed

Despite the global economic depression of the 1970s, Korea’s economy flourished and steel business boomed. With experience in building Pohang Works, POSCO had the capabilities and know-how to establish Gwangyang Works.

Building on Great History: 1993~

Pictured here: 1994.10 – POSCO listed on the NY stock exchange / 1995.9 – POSCO Center in Seoul Opens / 2000.10 – Privatization of the company

Since its early beginnings, POSCO has come long ways. In efforts to become number one, POSCO has been contributing monumental achievements to the global steel industry.

Pictured here: Molten iron being transformed into high-quality steel

It has been recognized among the Top 100 Davos Forum Global Companies, #1 by Forbes Magazine as the Most Respected Korean Company and #1 Most Competitive Steel Manufacturer by World Steel Dynamics.

Pictured here: Still shots from the POSCO film which portrays steel which surrounds us in everyday products

In celebration of POSCO’s foundation day, we’d like to share a video about the roots of POSCO.

POSCO has made monumental achievements to the global steel industry by creating world’s best, world’s first technologies. Its products are recognized as one of the most competitive in the global market. As the first to develop Automobile PosM Steel technology, POSCO has made advancements in safety and weight reductions in automobiles.

Beyond being the number one steel company, POSCO is also looking towards the future for transformation and growth. POSCO is strategically pursuing opportunities in the energy and integrated materials business. It is also exerting efforts to increase competitiveness and efficiency in the renewable energy sector. POSCO is also gaining ground in the energy market with applicable high-quality products that can withstand extreme environments.

Pictured here: Finished high-quality steel products inside one of POSCO’s steel mills

POSCO’s Focus on Mutual Growth & Coexistence

POSCO understands that we live in an era where sharing and mutual understanding is essential. POSCO’s goal is to flourish with those who have been working with us to create a better world. To do this it has set improving the earth’s environment and giving back to the community as key goals.

We ask for your support as POSCO continues to build upon its rich history. Celebrating POSCO’s 46 years and recent inauguration of CEO Ohjoon Kwon, we are excited to bring “POSCO the Great” to life.

Peter Marcus said in his lecture, “POSCO was able to succeed as a global steelmaker because it has its own unique corporate culture,” emphasizing the importance of continuously developing POSCO’s unique and great corporate culture.

In addition, he mentioned the importance of continuous R&D investment activities to maintain competitiveness, explaining, “5 companies globally, POSCO, NSSMC (Nippon Steel & Sumimoto Metal Corp), JFE, CSC (China Steel), and Baoshan Iron & Steel, are showing competitive R&D activities.”

He also pointed out that the steel industry today is facing an extremely difficult environment, forecasting that the growth engine from China will be exhausted while the remaining power for new growth of BRICs will not be sufficient, thus the downcycle of the steel industry will continue until around 2018.

In the long term, scrap production supply from China will increase rapidly while DRI (Direct Reduced Iron) competitiveness will recover due to shale gas, leading to distinct competition between iron sources forecasting a decline in material costs such as iron ores, DRI, and HBI (Hot Briquetted Iron).

In the mid- to long-term, increases in steel demand will be prominent in the Middle East regions rather than China, where steel production will increase 1.5% annually from 1,574 million tons in 2013 to 1,873 million tons by 2025.

Lastly, Marcus forecast that there is a high chance that the increase rate of steel demand in China will stagnate at less than 1% until 2025, and that the increase rate of annual steel production will reach 7.9% until 2014 but only 0.59% for the ten years after 2015.

Marcus explained that this is based on the decrease of GDP growth rate, decline in demand due to the depreciating construction economy, and weakened export competitiveness due to a strong Chinese yuan value.