Steelmaker Posco keeps spending target steady

South Korea's Posco, the world's sixth-largest steelmaker, kept its spending target for this year largely unchanged yesterday at 2.9 trillion won (HK$20.5 billion) from three trillion won last year as it expects Chinese demand to remain sluggish.

Steel prices are hovering at their lowest in a decade, as China, the world's biggest producer and consumer of the alloy, faces weak demand from manufacturers in a sluggish economy.

The market is also flush with steel from mainland producers.

With the outlook for China unlikely to improve soon, Posco has been trying to restructure its affiliates since chairman Kwon Oh-joon took office in March last year, but analysts say it is not moving fast enough to shore up its balance sheet.

Posco said it expected sales of 29.3 trillion won this year, hardly changed from 29.2 trillion won last year.

Last week, Posco posted a smaller-than-expected 30 per cent year-on-year rise in its operating profit for the fourth quarter of last year.