POSCO Increases Profit Target in 2018

South Korean steelmaker POSCO said Monday that it expects sales to rise in 2018, boosted by high steel prices in China and strong global demand, which helped boost profits by nearly a third in the second quarter.

The world's fifth-largest steelmaker raised its 2018 revenue forecast to 64.1 trillion won ($ 56.7 billion) from its forecast of 63 trillion won in April. POSCO said in a statement that it expects Chinese steel prices to remain high on tighter supplies following the closure of old plants amid ongoing restructuring in China's metals business.

A brighter forecast for the full year was adopted after consolidated operating income for April-June rose 28% to 1.25 trillion won from 979.1 billion won a year earlier.

Revenue for the quarter increased 7.6% to 16.08 trillion won from 14.95 trillion won a year ago, helped by rising prices. This trend emerged in the previous quarter with strong demand and lower productivity in China.

POSCO said Monday that it expects average prices for iron ore, a key contributor to steel production, to be between $ 60 and $ 65 per tonne in the third quarter, up from $ 65 per tonne in the second quarter.

For coking coal, another important feedstock for the metals business, POSCO expects prices to be lower in the third quarter in the range of $ 175 to $ 185 per tonne, up from $ 190 per tonne in the previous quarter.