Korean Steelmakers to Cut Prices of Steel Plates for Cars

SEOUL, March 4 (Yonhap) – POSCO and Hyundai Steel Co., South Korea’s leading steelmakers, will cut the prices of their steel plates for cars starting next month, company officials said Tuesday, a move feared to hit their business performance this year.

“In accordance with a request by our parent company Hyundai Motor, we have decided to cut steel plate prices by 80,000 won (US$74.77) per ton in March and April, and by 90,000 won per ton from May to July,” a Hyundai Steel official said, requesting anonymity.

The price for August and after will be decided through negotiations with Hyundai Motor Co. set for June, the official said.

Hyundai Motor reportedly asked its steel making affiliate to cut prices last week in order to cut auto production costs.

The move by Hyundai prodded the country’s biggest steelmaker POSCO to start talks with carmakers, including Hyundai Motor, to also mark down prices. 
“We are negotiating with carmakers over the reduction of steel plate prices, but we have yet to decide how much,” a POSCO official said.

The price cuts are likely to hurt the steelmakers’ earnings this year, deepening their troubles when the steel industry as a whole is in the midst of a prolonged slump, market watchers say.

Shares of POSCO and Hyundai Steel have fallen nearly 10 percent since last week. Hyundai Steel stocks dropped to 68,100 won (US$63.61) on Tuesday from 77,600 won (US$72.48) on Feb. 24, and POSCO’s shares fell to 272,500 won (US$254.52) from 288,500 won (US$269.46) over the week.

POSCO’s net profit tumbled 43.2 percent to 1.36 trillion won (US$1.27 billion) last year compared with the previous year, and Hyundai Steel posted a 11.7 percent drop in its net income to 709.4 billion won (US$662.6 million) over the same period.