Korean steel producer,
) 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,
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,
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.
Shiloh Industries Inc.
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)
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
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