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POSCO Holdings. (Photo=Yonhap News) |
[Alpha Biz= Reporter Kim Jisun] POSCO Group Chairman Jeong-Woo Choi, who has prioritized rebuilding competitiveness in the steel industry, is reportedly considering selling its Chinese subsidiary. According to the steel and investment banking industries on the 7th, POSCO Holdings is reviewing liquidity options for its Jiangsu-based subsidiary, PZSS (POSCO Zhangjiagang Stainless Steel), including the potential sale of its stake.
POSCO Holdings stated, “We are exploring liquidity options for PZSS to strengthen profitability,” and added that it plans to appoint an advisor to devise specific measures, including a potential sale.
Established in 1997 through a joint investment of $1.24 billion (approximately 1.73 trillion won) by POSCO and China’s Jiangsu Shagang Group, PZSS marked POSCO Group’s first fully integrated steelworks overseas. This steelworks handles all stages of production, from raw iron to finished products, including stainless cold-rolled steel production, establishing a stainless steel production base in China.
However, PZSS faced challenges starting in 2016 when a sharp decline in nickel prices widened its losses, leading the company to be considered for restructuring under former POSCO Chairman Ohjoon Kwon. Despite these challenges, its symbolic value as POSCO’s first integrated steel mill led to its retention.
Currently, POSCO Holdings and POSCO China hold 58.6% and 23.9% of PZSS, respectively, with Jiangsu Shagang Group holding the remaining shares. The sale of this stake is seen as part of a restructuring initiative to offload underperforming assets. PZSS recorded a net loss of 169.8 billion won last year.
Although the company achieved nearly 200 billion won in operating profit as recently as 2021, its performance has deteriorated due to the Chinese market downturn and oversupply in stainless steel, turning to losses in 2022, with the deficit worsening.
AlphaBIZ Kim Jisun(stockmk2020@alphabiz.co.kr)
