POSCO may extend output cut through March, new CEO says

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SEOUL, Feb. 27 (Yonhap) -- POSCO, the world's fourth-largest steelmaker, may have
to extend its production output cut through March due to slumping demand from
automakers and shipbuilders, its new chief executive officer said Friday.
"We expect output reduction of up to 800,000 tons in the first three months of
the year," Chung Joon-yang told reporters after his appointment as the chief of
POSCO was approved by shareholders.
POSCO slashed production in December for the first time in its 40-year history,
joining moves by foreign rivals such as Arcelor Mittal and Nippon Steel Corp. as
the global recession weakened demand.
The steelmaker said earlier it would slash its output of crude steel by around
200,000 tons this month, following a reduction of 570,000 tons during the two
previous months.
"More output cuts will be made if demand does not recover after the first half of
the year," he said. "If the current downturn ends in the first half, our
production cut will be only about 2 million tons, but if it's extended to two to
three years, we may have to trim outputs by 30 percent."
POSCO forecast earlier that sales would fall by up to 12 percent this year and
steel output could drop by as much as 12 percent to 29 million tons.
Chung said POSCO will consider buying rivals as asset values drop adding that its
investment in India and Vietnam will continue.
POSCO is seeking to build a $12 billion steel mill in iron-rich Orissa on the
east coast of India, and a $490 million steel mill at the Phu My industrial
complex near Ho Chi Minh City in southern Vietnam.
POSCO reported a record profit of 4.45 trillion won (US$2.93 billion) last year
on sales of 30.64 trillion won. Its operating profit surged more than 50 percent
to a record of 6.5 trillion won. But its fourth-quarter result of 721 billion won
in profit was lower than expected.
Chung joined POSCO in 1975 and has held executive positions since 2004, starting
as head of the Gwangyang mill. He switched to POSCO Engineering & Construction
only in November last year as chief executive of the construction unit.
sam@yna.co.kr
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