Posted on 09 Sep 2022
South Korean steel producer Posco plans to resume operations at its three blast furnaces at its Pohang complex sequentially from 10 September, while steel production is expected to restart during the Chuseok holiday over 9-12 September.
All operations, including steel production and rolling, at Pohang were suspended on 6 September because of flooding following Typhoon Hinnamnor. The steel plant is linked to handle the molten iron produced in the blast furnace. The steelworks is expected to return to normal after electricity supplies are restored.
The Seongang electricity substation, which suffered flood damage, will be normalised by 8 September, with desalinated water facilities and power plants resuming by 9 September to supply steam, oxygen and nitrogen necessary for the early operation of the blast furnaces, the company said. It is aiming is to normalise the substation by 10 September to complete the electrical recovery at the steel mill.
Extensive drainage work is currently under way for underground facilities at Pohang. Workers at Pohang and Posco's Gwangyang steelworks during the Chuseok holiday will adjust operating plans to support the recovery, with all environmental maintenance within the facilities aiming to be completed during the holiday period.
Typhoon Hinnamnor prompted a sudden overflow of the Naengcheon river near the Pohang steelworks. This force majeure event led to flooding and power outages in most areas of the steelworks, including the substation. Posco planned to convert some of the slabs produced at Pohang to Gwangyang, with output increased at Gwangyang as much as possible to offset the losses at Pohang.
Posco on 7 September was looking to sell slabs from Pohang in the spot market and also declare a force majeure on its iron ore cargoes. Buyers in southeast Asia indicated that slab prices above $500/t cfr were unlikely to find customers given weaker regional demand. No specific spot iron ore offers from the steel mill or rediversion of cargoes destined to the mill have emerged.
Posco imported around 55mn t of iron ore and 28mn t of coal in 2021. Coal, iron ore and nickel represent the largest components of the company's costs, with it typically maintaining a month of raw materials in inventory. The company usually agrees on the purchase price of coal and iron ore with its suppliers based on the spot market price periodically. The Argus ICX 62pc iron ore index was at $95.90/dry metric tonne cfr Qingdao on 7 September, down by 30.5pc from a year earlier. The Argus premium low-volatile fob Australia coking coal index was at $274/t, flat against the previous year, while the cfr Asean hot-rolled coil index was at $587/t and down by 33.3pc.
Source:Argus Media
