Posco lifts sales target as steel trade rebounds

Posco, the world's number four steelmaker, expected a further recovery in the global steel industry and raised its 2010 sales target.

Asian steelmakers led by Japan's Nippon Steel and China's Baosteel are set to raise steel prices to defend margins after agreeing to pay nearly double for iron ore imports and accepting a quarterly pricing system instead of annually fixed deals.

But the flagging construction and shipbuilding industries, major steel consumers, may hold back steelmakers' efforts to fully pass on soaring cost pressure to customers, denting their second-half earnings outlook, analysts say. "Steel trading has improved both in the domestic and overseas markets, lifting our sales and shipments... we expect the market would continue its recovery and thus decided to raise 2010 sales and production forecasts," Posco said in a statement.

The South Korean company lifted its 2010 sales target by eight per cent to 31.9 trillion won (Dh105bn, $28.6bn) and crude steel output forecast by 100,000 tonnes to 34.5 million tonnes.

Posco, which ranks behind ArcelorMittal, Nippon Steel and Baosteel, is expected to make two rounds of price increases between now and the third quarter.

Follow Emirates 24|7 on Google News.