POSCO Expands CGL Facility in India - Analyst Blog
04 Juni 2012 - 3:00PM
Zacks
Korean steel producer,
POSCO (PKX) has moved a step forward to leverage
benefits from the growing automobile market in India. The company
recently concluded the construction of its Continuous Galvanizing
Line (CGL) with an annual production capacity of 450,000 tons in
Maharashtra, India.
POSCO’s Indian unit, POSCO
Maharashtra, through this newly established CGL facility will be
engaged in manufacturing Galvanized Steel (GA) and Galvannealed
Steel (GS) plates which are widely used in automobile and home
electronics industry. Gwangyang Steelworks will provide the
necessary raw materials for the company’s production procedure.
Besides, the CGL facility is expected to enhance the company’s
presence in India as well as in global markets by establishing a
supply chain for POSCO’s manufactured automobile products.
According to the World Steel
Association, steel demand in India is expected to grow by 6.9% in
2012 and 9.4% in 2013. To meet this end, the company will soon
construct an additional cold-rolled steel factory and an electric
steel plate factory by 2014 and 2013, respectively.
POSCO’s brand acquisition strategy,
sales execution, marketing and innovation capabilities helped it
establish itself as the world’s third largest steelmaker and market
leader in the industry. The company projected a 3% year-over-year
increase in global steel demand and roughly a 1% increase in
domestic demand in the fiscal year 2012. However, it faces stiff
competition from rivals such as Grupo Simec S.A.B. de
C.V. (SIM), CLARCOR Inc. (CLC) and
Shiloh Industries Inc. (SHLO).
The Zacks Consensus Estimates for 2012 and 2013 are at $7.61 and
$8.66, respectively. These represent a year-over-year decline of
29.14% in 2012 but a growth of 13.80% in 2013. We currently
maintain an ‘Underperform’ recommendation on POSCO. The steel giant
has a Zacks #4 Rank, translating into a short-term (1-3 months)
‘Sell’ rating.
CLARCOR INC (CLC): Free Stock Analysis Report
POSCO-ADR (PKX): Free Stock Analysis Report
(SHLO): ETF Research Reports
GRUPO SIMEC SA (SIM): Free Stock Analysis Report
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