POSCO Holdings Stock

POSCO Holdings Inc. operates as an integrated steel producer in Korea and internationally.

The company also engages in businesses that complement its steel manufacturing operations and also carefully seek out promising investment opportunities to diversify its businesses both vertically and horizontally. POSCO International Corporation (POSCO International) is a global trading company that primarily engages in trading of steel and raw materials, as well as investing in energy and mineral development projects throughout the world. POSCO Engineering & Construction Co., Ltd. (POSCO E&C) is one of the leading engineering and construction companies in Korea that primarily engages in the planning, design and construction of industrial plants and architectural works and civil engineering. POSCO Energy Corporation is the largest private power generation company in Korea.

Steel Operations

The company is the largest fully integrated steel producer in Korea, and one of the largest steel producers in the world, based on annual crude steel production. The company produced approximately 43.0 million tons of crude steel and stainless steel in 2021, a substantial portion of which was produced at Pohang Works and Gwangyang Works. As of December 31, 2021, the company had approximately 45.3 million tons of annual crude steel and stainless steel production capacity, including 40.7 million tons of production capacity in Korea. Pohang Works and Gwangyang Works are two of the most technologically advanced integrated steel facilities in the world. The company manufactures and sells a diversified line of steel products, including cold rolled and hot rolled products, stainless steel products, plates, wire rods and silicon steel sheets. The company is able to meet a broad range of customer needs from manufacturing industries that consume steel, including automotive, shipbuilding, home appliance, engineering and machinery industries.

Major Products

The company manufactures and sells a broad line of steel products, including cold rolled products; hot rolled products; stainless steel products; plates; wire rods; and silicon steel sheets.

In addition to steel products produced by it and directly sold to external customers, the company engages its consolidated sales subsidiaries (including POSCO International) to sell its steel products produced by it.

Cold Rolled Products

Cold rolled coils and further refined galvanized cold rolled products are used mainly in the automotive industry to produce car body panels. Other users include the household goods, electrical appliances, engineering and metal goods industries. The company’s deliveries of cold rolled products produced by it and directly sold to external customers amounted to 10,373 thousand tons in 2021, representing 34.8% of the company’s total sales volume of principal steel products produced by it and directly sold to external customers.

Cold rolled products constitute the company’s largest product category in terms of sales volume and revenue from steel products produced by the company and directly sold to external customers. In 2021, the company’s sales volume of cold rolled products produced by it and directly sold to external customers increased slightly by 0.3% compared to its sales volume in 2020.

Hot Rolled Products

Hot rolled coils and sheets have many different industrial applications. They are used to manufacture structural steel used in the construction of buildings, industrial pipes and tanks, and automobile chassis. Hot rolled coil is also manufactured in a wide range of widths and thicknesses as the feedstock for higher value-added products, such as cold rolled products and silicon steel sheets.

The company’s deliveries of hot rolled products produced by it and directly sold to external customers amounted to 8,862 thousand tons in 2021, representing 29.7% of its total sales volume of principal steel products produced by it and directly sold to external customers. The largest customers of the company’s hot rolled products are downstream steelmakers in Korea, which use the products to manufacture pipes and cold rolled products.

Hot rolled products constitute the company’s second largest product category in terms of sales volume and third largest product category in terms of revenue from steel products produced by it and directly sold to external customers. In 2021, the company’s sales volume of hot rolled products produced by it and directly sold to external customers increased by 7.6% compared to its sales volume in 2020 primarily due to its efforts to adjust its product portfolio and increase the production and sales of hot rolled products.

Stainless Steel Products

Stainless steel products are used to manufacture household goods and are also used by the chemical industry, paper mills, the aviation industry, the automotive industry, the construction industry and the food processing industry.

The company’s deliveries of stainless steel products produced by it and directly sold to external customers amounted to 2,984 thousand tons in 2021, representing 10.0% of its total sales volume of principal steel products produced by it and directly sold to external customers.

Stainless steel products constitute the company’s second largest product category in terms of revenue from steel products produced by it and directly sold to external customers. Although sales of stainless steel products accounted for only 10.0% of total sales volume of the principal steel products produced by the company and directly sold to external customers in 2021, they represented 20.6% of its total revenue from such steel products in 2021. In 2021, the company’s sales volume of stainless steel products produced by it and directly sold to external customers decreased slightly by 0.2% compared to its sales volume in 2020.

Plates

Plates are used in shipbuilding, structural steelwork, offshore oil and gas production, power generation, mining, and the manufacture of earth-moving and mechanical handling equipment, boiler and pressure vessels and other industrial machinery.

The company’s deliveries of plates produced by it and directly sold to external customers amounted to 4,823 thousand tons in 2021, representing 16.2% of its total sales volume of principal steel products produced by it and directly sold to external customers. In 2021, the company’s sales volume of plates produced by it and directly sold to external customers.

Wire Rods

Wire rods are used mainly by manufacturers of wire, fasteners, nails, bolts, nuts and welding rods. Wire rods are also used in the manufacture of coil springs, tension bars and tire cords in the automotive industry.

The company’s deliveries of wire rods produced by it and directly sold to external customers amounted to 2,063 thousand tons in 2021, representing 6.9% of its total sales volume of principal steel products produced by it and directly sold to external customers. The largest customers for the company’s wire rods are manufacturers of wire ropes and fasteners.

Silicon Steel Sheets

Silicon steel sheets are used mainly in the manufacture of power transformers and generators and rotating machines. The company’s deliveries of silicon steel sheets produced by it and directly sold to external customers amounted to 735 thousand tons in 2021, representing 2.5% of its total sales volume of principal steel products produced by it and directly sold to external customers.

Others

Other products include lower value-added semi-finished products, such as pig iron, billets, blooms and slab.

Markets

Domestic Market: The company primarily sells in Korea higher value-added and other finished products to end-users and semi-finished products to other steel manufacturers for further processing. Local distribution companies and sales affiliates sell finished steel products to low-volume customers. The company provides service technicians for large customers and distributors in each important product area.

Exports

The Steel segment’s export sales and overseas sales to customers abroad represented 57.4% of the Steel segment’s total revenue in 2021, 62.5% of which was generated from exports sales and overseas sales to customers in Asian countries.

The company distributes its export products mostly through Korean trading companies, including POSCO International, and its overseas sales subsidiaries. The company’s largest export market in 2021 was China, which accounted for 30.6% of its export revenue from steel products produced and sold by it. The principal products exported to China were cold rolled products, including continuous galvanized products.

The company’s second largest export market in 2021 was Asia (other than China and Japan), which accounted for 21.9% of its export revenue from steel products produced and sold by it. The principal products exported to Asia (other than China and Japan) were cold rolled products, including continuous galvanized products.

Anti-Dumping, Safeguard and Countervailing Duty Proceedings

From time to time, the company’s exporting activities have become subject to anti-dumping, safeguard and countervailing proceedings. As a steel producer with global sales and operations, the company is involved in trade remedy proceedings in markets worldwide, including in the United States. The company actively participates in such proceedings to minimize any adverse effects and associated risks. The company continues to carefully monitor developments with respect to trade remedy policy in all markets in which it participates and where necessary, vigorously defend its rights through litigation before tribunals, such as the U.S. Court of International Trade.

Competition

Domestic Market: The company faces competition from Hyundai Steel Co., Ltd. and from various foreign producers, primarily from China and Japan. In cold rolled products and stainless steel products, the company competes with Hyundai Steel Co., Ltd., smaller specialized domestic manufacturers and various foreign producers, primarily from China and Japan.

Other Businesses

Trading

The company’s trading activities consist primarily of trading activities of POSCO International. The company’s consolidated subsidiaries that also engage in trading activities include POSCO Asia Co., Ltd. that is located in Hong Kong; POSCO Japan Co., Ltd. that is located in Tokyo, Japan; POSCO America Corporation that is located in Georgia, U.S.A., POSCO (Thailand) Company Limited that is located in Chonburi, Thailand; and POSCO Singapore LNG Trading Pte. Ltd. in Singapore.

POSCO International is a global trading company that primarily engages in trading of steel and raw materials, as well as investing in energy and mineral development projects. It also manufactures and sells textiles and agricultural commodities.

Trading Activities

POSCO International’s trading activities consist of exporting and importing a wide variety of products and commodities, including iron and steel, raw materials for steel production, non-ferrous metals, chemicals, automotive parts, machinery and plant equipment, electronics products, agricultural commodities and textiles. POSCO International also engages in third-country trade that does not involve exports from or imports to Korea. The products are obtained from and supplied to numerous suppliers and purchasers in Korea and overseas, which are procured through a global trading network consists of overseas trading subsidiaries, branches and representative offices. Such subsidiaries and offices support POSCO International’s trading activities by locating suitable local suppliers and purchasers on behalf of customers, identifying business opportunities and providing information regarding local market conditions.

Natural Resources Development Activities: POSCO International also invests in energy and mineral development projects throughout the world. In particular, POSCO International holds interests in several gas field projects in Myanmar, where production of gas commenced in July 2013.

Construction

POSCO Engineering & Construction Co., Ltd. (POSCO E&C) is one of the leading engineering and construction companies in Korea, primarily engaged in the planning, design and construction of industrial plants and architectural works and civil engineering projects. In particular, POSCO E&C has established itself as one of the premier engineering and construction companies in Korea.

Others

As part of its diversification efforts, the company strives to identify business opportunities that supplement its steel, trading and construction segments, including power generation, LNG logistics, manufacturing of various industrial materials and network and system integration.

POSCO Energy Corporation: In 2006, the company acquired the largest domestic private power utility company that operates liquefied natural gas (LNG) combined cycle power generation facilities with total power generation capacity of 1,800 megawatts and subsequently renamed it POSCO Energy Corporation. Since the company’s acquisition, POSCO Energy Corporation has expanded its power generation capacity by constructing additional power plants in Korea and Southeast Asia. POSCO Energy Corporation’s total power generation capacity was approximately 3,412 megawatts as of December 31, 2021. POSCO Energy Corporation is also selectively seeking opportunities to expand into solar, wind and other renewable energy businesses in order to become an integrated provider of energy solutions.

POSCO Energy Corporation also operates an LNG receiving terminal with an aggregate capacity to process up to 3.0 million tons of LNG annually in Gwangyang as of December 31, 2021. In order to achieve maximum operational efficiency of its LNG terminal, it participates in the LNG trading and LNG ship gas trial businesses.

POSCO Chemical Co., Ltd.: POSCO Chemical Co., Ltd. specializes in the manufacturing of refractories and lime used in steel manufacturing processes, as well as a wide range of chemical products.

Others: POSCO M-Tech Co., Ltd. produces aluminum deoxidizers, substances used to remove excess oxygen during the steel manufacturing process to improve durability of steel products, and it also provides integrated steel product packing solutions for steel production facilities. POSCO ICT Co., Ltd. provides information and technology consulting and system network integration and outsourcing services.

Government Regulations

Pursuant to the Monopoly Regulation and Fair Trade Act of Korea, the company, as a non-financial holding company, are required to maintain the shareholding ratio of its subsidiaries above a certain threshold (i.e., 20% in case of a public company and 40% in case of a private company) and is also required to maintain its liabilities-to-equity ratio below 200%. The company is also required to annually report to the Korea Fair Trade Commission whether it has complied with such restrictive requirements.

History

POSCO Holdings Inc. was founded in 1968. The company was incorporated in 1968 under the Commercial Code of the Republic of Korea.