Posco, four Chinese firms slash output

Posco, Asia’s largest maker of stainless steel, may produce less of the rust-proof metal this year than initially planned because of slowing demand. “We are basically trying to maintain an appropriate level of production in order to secure profitability,” said Choi Doo Jin, a spokesman for the South Korean company, but did not give a figure for the cut. The mill had initially planned output of 1.7 million tonne. Posco extended in September an output cut of 20%, or 25,000 tonne, from the normal level, following similar reductions in July and August. The steelmaker, which has the capacity to make 2 million metric tonne of stainless steel annually, produced 1.7 million tonne in 2007 and 2 million tonne in 2006, Choi said.

Meanwhile, four big Chinese steelmakers have agreed to cut production until steel prices stabilise, which could mean the rest of this year, said Zou Jian, chairman of the China Metallurgical Mines Association. “The steel price declined a lot, so the steel companies decided to cut production until steel prices are stable,” he said. Shougang Group, Hebei Iron & Steel Group, Anyang Iron & Steel and Shandong Iron & Steel, all state-owned firms in northern China, agreed earlier this week to cut output by 10-20%, he said. The four firms have a total capacity of about 100 million tonne, almost one-fifth of China’s estimated production this year, which is expected to reach 520-550 million tonne.