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POSCO emerges from pandemic blues with record third-quarter profit

Falling iron ore prices and higher steel product prices also point to all-time high earnings for the full year

By Oct 13, 2021 (Gmt+09:00)

Workers at a POSCO plant
Workers at a POSCO plant

South Korea’s largest steelmaker POSCO is returning even stronger from the pandemic-caused economic slowdown, with an all-time high quarterly profit on robust demand from automakers, shipbuilders and construction firms.

Operating profit for the quarter ending Sept. 30 soared to a record 3.11 trillion won ($2.6 billion) on a consolidated basis -- a nearly fivefold increase from 670 billion won a year earlier, the company said in a regulatory filing on Wednesday.

The consolidated profit, which includes results of its affiliates such as POSCO International, POSCO Chemical and POSCO Energy, came as a surprise as it beat market expectations by a big margin.

The market had expected POSCO to post an operating profit of 2.5 trillion won.

Third-quarter sales increased 45% to a record 20.61 trillion won, the company said.

The group attributed the dramatic improvement to lower iron ore prices and higher product prices amid strong demand for steel used in the auto, shipbuilding and construction industries.

On a standalone basis, POSCO’s steel-making business also posted a record operating profit of 2.3 trillion won.

The company provided no details for the preliminary quarterly results. Final figures, including its net profit, will be announced in the final week of October.

POSCO CEO Choi Jeong-woo
POSCO CEO Choi Jeong-woo


Analysts said POSCO’s full-year consolidated operating profit could also rise to an all-time high of some 9 trillion won, well above the previous record high of 7.17 trillion won in 2008.

Steel demand from automakers and builders dried up throughout last year as many countries around the world imposed lockdowns in efforts to contain the spread of the pandemic.

However, the steelmaker now expects a significant improvement in sales and profitability this year, helped by a global economic recovery and increased cross-border shipments.

After posting its highest quarterly operating profit in nearly a decade in the first quarter of this year, the company said in April it is raising its full-year revenue target by 17.5% to 32.8 trillion won.

POSCO, the world’s fifth-largest steelmaker by output, has also raised the steel-product sales target to 35.4 million tons in 2021 from an earlier forecast of 35.3 million tons.

POSCO's furnaces
POSCO's furnaces


According to Korea Resources Corp., the benchmark Chinese spot price for iron ore was quoted at $110 per ton earlier this month, down 50% from a high of $220 in July.

The sudden sharp drop in iron ore prices comes as China, the world’s top steelmaker, is reducing production as its government pursues a carbon-neutral policy.

China’s crude steel production reached 83.24 million tons in August, down 12% from a year ago.

Lower iron ore prices often lead to a drop in the prices of steel products, but selling prices remained high in the third quarter partly due to China’s steel export bans, according to industry officials.

Korean steelmakers also raised the contract prices of steel plates used in ships from about 800,000 won a ton in the first half to 1 million won in the second half.

In September, POSCO increased its hot-rolled steel price by 50,000 won a ton.

The steel-making group’s stellar performance in the third quarter was also helped by improving profitability at other affiliates.

POSCO’s non-steel subsidiaries posted a combined 810 billion won in operating profit in the three months to September, almost double their profit in the year-year period.

The affiliates’ contribution to the group’s overall profit will increase in the coming years as they are diversifying their business portfolio, according to analysts.

Write to Kyung-Min Kang at

In-Soo Nam edited this article.
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