August 30, 2008

POSCO shares decline after benchmark coking coal prices triple

Bloomberg reported that Asia's biggest steelmaker by market value POSCO fell the most in almost three weeks in Seoul trading after the company agreed to a tripling in benchmark contract prices for coal this year.

POSCO declined KRW 16,500 or 3.2% to KRW 498,500 dropping by the most since March 20. The shares underperformed a 1.1% fall in the benchmark Kospi stock index.

The Korean steelmaker will pay Australian suppliers between 205% and 215% more for some of its coking coal for the year started April 1. Ms Ko Min Jin a spokeswoman for the Pohang said that prices will rise to a record for the steelmaking material after floods in Australia reduced global supplies.

Mr Kim Gyung Jung an analyst with Samsung Securities Co said that “The higher coal prices are weighing on the stock today. Investors seem to be concerned about whether POSCO will be able to raise steel prices by as much as it needs to do to recover rising costs.''