Steel giant becoming technology intensive

POSCO backs new high-value steel

By Kang Seung-woo

POSCO has been a driving force of the nation’s economic growth since the 1970s as a key supplier of basic industries such as car and shipbuilding.

Now the Korean steel maker is going a step further with its focus shifted to new technology development for the purpose of leading the rapidly-changing global steel industry.

POSCO, based in Pohang, North Gyeongsang Province, is speeding up its efforts to develop cutting-edge products as well as secure cost competitiveness on the back of advanced skills.

In 2010 POSCO, the nation’s sixth-largest company, posted a 60.3 percent gain in operating profit from the previous year after expanding its production base of high value products like twinning induced plasticity (TWIP) steel and galvanized steel-aerosols charged with electrostatics (GI-ACE).

TWIP steel, which uses a specific type of strain to increase the effectiveness of work hardening on the alloy, is easier to handle and excels in strength over other products.

It can improve fuel efficiency by enabling vehicles to become lighter and strengthen safety, so it is seen as an ideal material.

If a car becomes 10 percent lighter with TWIP steel, fuel costs can be reduced by 3 to 7 percent, while emissions of carbon dioxide can be lowered by about 13 percent.

The steel, which can also provide savings in manufacturing costs, is expected to emerge as the main item for automotive sheets in 2015, when environment-friendly vehicles are produced on a full scale.

There are only a few steelmakers in the world, including POSCO, to manufacture automotive steel plates because it requires difficult skills in production. As a result, despite high demand for the metal, providers have trouble meeting it.

Automotive steel is highly priced, 20 to 30 percent higher than other products.

In addition, contracts with carmakers are usually long-term deals because once a car adopts a steel product, an identical steel sheet is used for the car until they stop manufacturing the vehicle.

Although POSCO has competitiveness in TWIP steel, it was not easy for the steel company to reach its current level.

It required around 10 years of study and development and large amounts of money, accompanied by a lot of trial and error.

According to POSCO, Europe’s major steel manufacturers are following suit to come up with high-ductility products as the Korean maker did with TWIP steel.

POSCO said that it is poised for mass production of the metal for major carmakers in Europe.

Along with TWIP steel, POSCO surprised the world in August 2009 after developing the world’s first 590 MPa class galvannealed steel sheets for automotive outer body panels. MPa is a unit measure of strength.

“For the last 40 years, POSCO has evolved into a world class company and we survived the global financial crisis in 2008 because we have made efforts to develop new skills. To remain at an elite level, we have to continue focusing in the future,” POSCO Chairman Chung Joon-yang has said repeatedly.

In April last year, World Steel Dynamics (WSD), a leading steel information service, ranked POSCO first in its list of global steelmakers, based on scores in 23 categories from profitability and expansion plans to pricing power with large buyers and threat from nearby competitors.

POSCO has recently increased its foothold in the world steel market. Based on output, it sits fourth behind ArcelorMittal of Luxemburg, Hebei Iron and Steel Group and Baogang Group, both of which are from China.