Tag Archives: X

Rising iron costs hurt Posco results

Posco, one of the world’s biggest steel companies, sold 24% more of its product into Asia’s steel-hungry factories last quarter, but its profits still sank 8% as costs climbed faster.

The Korea-based giant confessed that its operating margins sank 4 full percentage points between July and September because strong global competition made it impossible to pass on rising iron ore and coal prices to its customers.

As a result, the company’s net slid $88 million even though its overall sales in the quarter increased dramatically — effectively, there was a lower incentive for it to process each ton of ore into finished steel.

The company did manage to raise its prices at the start of the second quarter, but this news indicates that the iron miners still have the upper hand — which is great news for the giants VALE (quote), BHP (quote) and RIO (quote) — and that the new system of pricing iron ore supply contracts on a quarterly basis is still generating plenty of short-term volatility in the industry.

PKX (quote) is moving

Asia Currencies South Korea Steel Stocks