POSCO sees Odisha investment as a burden on weak steel market conditions

Reuters reported that investors in South Korean steel bellwether POSCO are starting to go sour on the long-delayed USD 12 billion Odisha project that was once hailed as a profit driver.

A POSCO executive told Reuters that "The steel market is not in good shape, and we share investors' concerns about the overall market conditions.”

He added that "The Odisha investment would be a burden to us.”

The official, however, confirmed that POSCO was still sticking with its Odisha plan, noting that it would be years before the mill starts production and market conditions may improve by then.

The Odisha investment was part of a global expansion spree led by POSCO Group chairman and chief executive Chung Joon-yang, a nearly decade-long strategy that was intended to capitalize on rapid emerging economy growth and help reduce the company's reliance on its domestic market.

Mr Choi Moon-sun an analyst at Korea Investment & Securities said that "Question marks are growing over whether Posco's Indian investment would be valid. The company does not have enough money to finance the project.”

A series of acquisitions has left POSCO with a debt burden that has more than doubled over the past three years, while slowing growth in major markets such as China has hurt steel prices and margins. Last week, the steelmaker said it would bow out of a $5.3 billion steel mill development in Karnataka.

Source – Reuters