POSCO Holdings has sold the Zhangjiagang Port Hot Rolled Steel Plant to China's Chengshan Group. This sale process, which POSCO has been pursuing since last year as part of its restructuring of low-profit businesses, has been completed.

On the 9th, according to local media in China, POSCO signed a transfer agreement for the Zhangjiagang Port Hot Rolled Steel Plant with Chengshan Group on the 3rd. According to the agreement, Chengshan Group executives will be appointed to the board of directors of the Zhangjiagang Port Hot Rolled Steel Plant from that day. The sale method and amount have not been disclosed, but POSCO had previously indicated a desired sale price of around 500 billion won when it began the sale of the Zhangjiagang Port Hot Rolled Steel Plant last year.

Steel produced from the electric furnace at POSCO's Zhangjiagang stainless steel plant is being put into the refining furnace to remove impurities./Courtesy of POSCO

The Zhangjiagang Port Hot Rolled Steel Plant was established by POSCO in 2002 as a base for its operations in China. Its production capacity exceeds 1.1 million tons annually, which is more than half of Korea's annual stainless steel production (2 million tons). POSCO Holdings holds 58.65% of the equity, while POSCO China holds 23.88%. The remaining 17.52% is held by the Chinese steel company, SGAI Group.

POSCO decided to sell due to declining profitability of the Zhangjiagang Port Hot Rolled Steel Plant, which has been affected by oversupply in line with the Chinese government’s steel self-sufficiency strategy.

Last year, the Zhangjiagang Port Hot Rolled Steel Plant recorded sales of 3.0421 trillion won, a 9% decrease from the previous year, and posted a net loss of 129.9 billion won. The plant has recorded net losses since 2022, accumulating a total loss of 377.2 billion won up to last year.

Since the appointment of Chairman Jang In-hwa in March last year, POSCO has been restructuring 125 low-profit assets. By last year, it had completed restructuring on 45 assets, securing 662.5 billion won in cash. POSCO plans to utilize the secured funds for investments in steel plants in the United States and India.

A representative from POSCO Holdings said, "The Zhangjiagang Port Hot Rolled Steel Plant is under discussion with multiple prospective buyers, so it is difficult to confirm specific details."

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