POSCO expands automotive steel salesMadeinkoreablog
POSCO is accelerating efforts to increase the sale of its automotive steel products as part of a strategy to fill in profit voids caused by an ongoing struggle in the steel industry.
The Korean steelmaker said on Sunday that it will take part in the North American International Auto Show, which starts on Monday.
POSCO plans to display about 30 advanced automotive steel materials.
This will mark the first time that a steelmaker will have set up a separate booth at an international motor show. POSCO officials say the decision is part of its shift to focus more on automotive products because it expected demand for cars to improve slightly in key target markets.
“The highlight of the show will be an ideal automotive body in which all our top-notch POSCO-made steel products are used,” said a company official.
He said the automotive body was 26.4 percent lighter but safer than others.
Products to be exhibited include “dream material” twinning-induced plasticity steel (TWIP), which the company began producing commercially last year for the first time in the world.
The TWIP steel is three to four times stronger than other steel, yet 30 percent lighter and five times easier to handle. Due to its great impact absorption, it can improve safety when used in bumper beams.
Rival steelmakers have been working on the materials but failed to produce them commercially according to POSCO.
The company will also reveal the PosM-XF, next generation TWIP with improved forming ability, together with the recently developed 1GPa TRIP steel.
POSCO supplies its steel products to the top 15 automakers.
“As the industry is struggling with falling profitability, we are closely watching what POSCO’s aggressive marketing will bring,” said the company official.
POSCO has been in serious trouble in recent years because of external and internal factors.
On the business front, a weak steel price stemming from increased output from China hit the company. Analysts say the industry will suffer from oversupply again this year.
Sales of POSCO products last year are estimated to be below 60 trillion won, with an operating profit of 2.6 to 2.8 trillion won, far worse than the previous year, according to local analysts.
Its fourth-quarter operating profit is expected to fall more than 20 percent, year-on-year.
POSCO officials say participating in the show represents the company’s commitment to differentiate itself from its chief rivals as a manufacturer of premium products.
The company is aiming to increase the share of its premium products to more than half its total sales.
“Out of the 1.5 billion tons of steel production worldwide, premium products account for only 10 percent and their prices seldom go down regardless of market conditions,” POSCO CEO Kwon Oh-joon said recently.
Kwon has been highlighting the “solutions marketing,” where the company sells not only products but also software and welding and forming know-how.
The company’s marketing of automotive steel products centers on world-premium products.
As a result, automotive steel plate sales increased 7 percent in 2014, topping 8 million tons for the first time in 2014.
POSCO aims to increase the sales ratio of world premium products to 45 percent by the end of this year, to 50 percent in 2017.
“With the aggressive solution marketing, we will lift the sales ratio of premium products to more than 70 percent in the future, from 40 percent now,” the company official said.