POSCO Chief calls for China to cut steel supplies

POSCO Chairman Kwon Oh-joon lamented the global steel industry’s overwhelming supply in his first interview with a local business daily Thursday.

Kwon said the oversupply, fueled mainly by ramped-up production from China, is turning the markets lopsided. With that in mind, the chairman called for China to cut its steel supply by at least 30 percent.

Between 2005 and 2014, China’s steel production doubled to 820 million tons from 350 million tons. Global production also rose, but until last year the situation had not been too dire as China consumed up to 90 percent of the supplies.

But a recent slowdown in the Chinese economy has been distorting the supply and demand curve, as the world‘s second-largest economy is incapable of consuming as much steel as before.

Addressing such problems, Kwon said the Korean steelmaker would refrain from building more furnaces.

It seemed like his comments were aimed at not just POSCO, but at other steelmakers in Korea, industry watchers said, asking for their cooperation in not erecting more furnaces.

Kwon also said that POSCO won’t be acquiring faltering Dongbu Steel, which recently appeared on the selling block.

The chairman has driven reform measures to revive the steelmaker, which was hit by a plethora of misfortunes including executive-level corruption and the ongoing global oversupply, since he took the helm last March.

By Kim Ji-hyun (jemmie@heraldcorp.com)