Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (24403)	2/25/2005 12:32:33 PM
From: RealMuLan	Read Replies (1) \| Respond to of 116555

INTERVIEW: S Korea's Posco May Hike Local Steel Prices Thursday February 24, 1:14 PM By Malcolm Scott Of DOW JONES NEWSWIRES SYDNEY (Dow Jones)--South Korea's Pohang Steel Corp. (005490.SE) Thursday said it is likely to raise local steel prices to close a gap with higher imported Japanese steel. With Japanese steel makers increasing prices, "the price gap is getting bigger and bigger," Shin Sungwon, manager, Posco's finance management department, told Dow Jones Newswires in an interview. "We will raise our product prices too, but I can't say how much," Shin said on the sidelines of a Sydney debt conference, adding later that no final pricing decision has been made. "But our company's pricing policy is to keep the same our price as the international price, so we are trying to close the gap between the prices," he said. Recent appreciation of the Korean won meant the gap between Japanese imported steel and local steel prices has narrowed, he said. Shin noted Japan has already raised export prices for the second quarter, leading to a US$40 to US$50 a ton differential. Shin said Posco wants to attract more institutional investors but has no plans to issue new debt, with its current US$2 billion in debt shrinking as it pays back maturing loans. The US$18 billion steel maker has several investments in Australia, but has no firm plans for new investments in 2005, he said, especially with commodity prices at record levels. In December last year, Posco signed a memorandum of understanding to buy a 5% stake in two coal mines - Glennies Creek Mine and Carborough Downs Mine - enabling it to buy a total of 12 million tons of high-quality coal. A few months earlier, Posco acquired a 9% stake in the Foxleigh coal mine. To secure iron ore supply, Posco and BHP Billiton (BHP) are developing the Area C mine in Western Australia's Pilbara region, securing access to an annual three million tons of ore. In the latest sign of price pressures facing Asian steel makers, Brazilian miner Companhia de Vale do Rio Doce (RIO), or CVRD, said Wednesday that Posco has agreed to pay 71.5% more for iron ore supplied by CVRD in 2005. The annual price agreement is CVRD's second in two days, with CVRD earlier saying Japanese steel makers led by Nippon Steel (5401.TO) and JFE Steel Corp. (5411.TO) had agreed to a 71.5% price hike for 2005. Annual price hikes generally take effect April 1 for Asian iron ore buyers. Anglo-Australian miner Rio Tinto Plc. (RTP) has also won a 71.5% price hike from Japanese mills, with global rival BHP Billiton likely to win the same price increase. While Japanese steel makers face huge hikes in raw materials prices, analysts say it's their customers such as automakers and shipbuilders who are most likely to suffer. Apart from steep iron ore price hikes, Japanese steel firms already agreed to hefty rises in coal prices late last year as robust steel consumption, particularly in China, keeps global steel supplies very tight. But analysts point out that automakers and shipbuilders in Japan have nowhere else to go for the type of high-grade steel sheet and plate they need for their products, so ultimately they'll be the ones who foot the bill. "Nothing will change the pattern of steel makers passing on the increased raw materials costs to their product prices," Daiwa Institute of Research's analyst Takashi Murata said. -By Malcolm Scott, Dow Jones Newswires; 61-2-8235-2958; malcolm.scott@dowjones.com -Edited by Ian Pemberton sg.biz.yahoo.com