Posco steels against uncertainty with financial support for trading companies

Posco is stabilizing the steel supply chain by backing its trading companies with financial support to boost export competitiveness as global uncertainty rises on tariff hikes, Chinese steel oversupply, a weak won and high oil prices.

Posco and the Industrial Bank of Korea (IBK) have transferred 20 billion won ($13.6 million) to the Korea Trade Insurance Corporation since January to contribute to the agency’s 400 billion won preferential guaranteed system for Posco’s trading companies. IBK offers a preferential loan rate with interest as low as 2 percent, along with reduced guaranteed fees.

The system allows lenders to raise funds without collateral while offering unchanged benefits for up to 3 years to support financial management in the steel industry, which is subject to an extended manufacturing process, from raw material purchasing to production and processing and finally shipping and payment.

Posco’s seven trading companies, including Kukje Steel and TGSPipe, are benefiting from the program.

“It means a lot for us to secure capital flexibility to respond to global changes, as we have a large export volume,” a Kukje Steel representative said. “In a world where the global market is volatile and the domestic market struggles as well, being able to secure financial flexibility was very helpful.”

A TGSPipe spokesperson mirrored the sentiment, saying, “In this unpredictable era driven by tariff hikes, high oil prices and wars, the financial aid could raise the company’s responsiveness to adapt to the change in production schedule and in its capital balance.”

When combining the system low-interest funds worth some 700 billion won and the steel responsible management fund, the value of Posco’s support initiative totals over 1 trillion won.

“The fact that our financial program is leading to tangible results for trading companies means everything to us,” said Posco representative. “We will lead efforts to raise the export competitiveness of the domestic steel industry and strengthen the steel industry ecosystem.”

BY LEE DAHYUN [lee.dahyun3@joongang.co.kr]