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POSCO-SS VINA in Vietnam

Zacks Equity Research

Korean steel maker POSCO (PKX) aiming to benefit from the growing South East Asian markets, recently laid the foundation of POSCO SS-VINA in Vietnam through its operating unit, POSCO Specialty Steel . The plant will be located at Phu My Second Industrial Zone in Ba Ria-Vung Tau province.

POSCO-SS VINA will specialize in manufacturing shape steel and steel reinforcement, having an annual production capacity of one million tons. The plant will be equipped with one steel manufacturing mill having 120-tons of molten metal generating capacity at once and another rolling mill having one million tons of shape steel, steel reinforcement and bar steel annual production capacity.

Construction of POSCO-SS VINA will likely be complete by July 2014. The plant will enable POSCO to capture market requiring steel reinforcement and shape steel; quite widely used in construction projects. Government spending on infrastructure development in Vietnam is rising with an 8% demand increase projected for steel reinforcement and shape steel in the region. 

Apart from the Vietnamese market, POSCO also remains optimistic about steel consumption in the Korean market, with demand ever rising from the automotive, construction and shipbuilding sectors since exports are also expected to play a major growth driving catalyst. For 2012, the company anticipates a 2.5% increase in revenue to KRW 70.6 trillion. Crude steel production is projected to rise 3.0% while investments by 10.0%.

The Zacks Consensus Estimate for 2012 and 2013 are at $7.61 and $8.66, respectively. These represent a year-over-year decline of 29.14% in 2012 and growth of 13.80% in 2013.

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