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Earnings

POSCO Chem Q3 profit surges as battery materials lift sales to fresh high

Cathode materials sales soar 63% on higher raw material prices

By Oct 21, 2021 (Gmt+09:00)

A POSCO Chemical researcher tests the quality of battery cells (Courtesy of POSCO Chemical)
A POSCO Chemical researcher tests the quality of battery cells (Courtesy of POSCO Chemical)

South Korea’s POSCO Chemical Co. enjoyed a surge in operating profit in the third quarter as higher sales of battery materials ramped up revenue to an all-time high.

The unit of the country’s steel giant POSCO Co. said its operating profit soared 62.4% on-year to 31.5 billion won ($26.8 million) in the July-September period with sales up 29.9% to a quarterly record of 505 billion won, according to POSCO Chemical’s filing to a financial regulator on Oct. 21. It was the first time to post quarterly revenue of more than 500 trillion won.

Sales of key secondary battery materials including cathode and anode materials accounted for 42.5% of the total revenue. Cathode materials sales jumped 63.1% to 171.7 billion won from a year earlier as higher prices of raw materials such as nickel offset slower demand from electric vehicles due to the prolonged automotive chip shortage.

Revenues from the chemical and refractory businesses also improved. Chemical sales jumped 31.1% to 172.8 billion won thanks to improved selling prices and volume of coal tar and light oil on strong crude prices. Coal tar, a by-product of steel production, is also used for anode materials.

Refractories revenue grew 11.1% to 104.8 billion won on higher steel production. POSCO, the world’s fifth-largest steelmaker by output, reported an all-time high quarterly profit on robust demand from automakers, shipbuilders and construction firms.

POSCO Chemical plans to focus on production capacity expansion to secure stable secondary battery materials.

“We expanded cathode and precursor facilities by 30,000 tons a year each in China through a joint venture with Huayou Cobalt this year, while accelerating output of pitch, a material for anode materials coating,” said a company official.

The company aims to build battery raw materials plants in the US and Europe. It also plans to complete construction on an artificial graphite anode materials plant in Pohang, South Korea, by the end of this year.

Write to Jeong Min Nam at peux@hankyung.com

Jongwoo Cheon edited this article.

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