POSCO chairman warns of trade protectionism trends

[THE INVESTOR] South Korea’s largest steelmaker POSCO’s chairman Kwon Oh-joon called on employees to stay wary of trade protectionism trends that are being increasingly promoted by advanced nations amid deteriorating global economic conditions.

“If trade protectionism is extended to countries in Southeast Asia, a key market for POSCO, it could have a major impact on our exports,” Kwon said in a recent email he sent to POSCO workers, industry watchers said on June 24.

In May, the US Commerce Department issued a final announcement outlining 265.79 percent anti-dumping tariffs on Chinese cold-rolled products.

Kwon pointed out that in the past, South Korea’s steel exports to the US had plunged more than 30 percent when Washington implemented safeguards on steel imports.

Countries like Germany, India and Japan also are reinforcing their nontariff trade policies, he added.

An oversupply of steel products from China is cited as one of the reasons behind such trends.

“At the same time, South Korea is seeing an increasing influx of raw material imports, mainly on account of it relatively lower trade tariffs. This can ultimately pose business risks,” the CEO said.

POSCO is currently undergoing an overhaul in the wake of deteriorating global market conditions and a internal corruption scandal.

Despite the setbacks, the company posted better-than-expected earnings in the first quarter. On a consolidated basis, POSCO saw its operating profit jump 93.7 percent from the previous quarter. The profit ratio also rose by 2.9 percentage points on-quarter to 5.3 percent.

For the second quarter, however, analysts expect POSCO to miss the market consensus. Consolidated sales are projected to decrease 8.3 percent on year to 13.92 trillion won, while its operating profit rise 5.7 percent to 725.2 billion won.

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