South Korea’s top steelmaker POSCO reported its largest-ever operating profit last year on strong steel demand driven by the global economic recovery and a cut in China’s steel output that lifted the prices of steel products.

POSCO announced in a regulatory filing on Wednesday that its preliminary operating profit on a consolidated basis for the fourth quarter ended December came at 2.33 trillion won ($1.96 billion), up 170.8 percent from the same period a year earlier, while sales stood at 21.4 trillion won, up 40.1 percent.

For the full 2021 calendar year, the company reported the historic high operating profit of 9.2 trillion won, jumping nearly four-fold from 2020 on the highest-ever sales of 76.4 trillion won, up 32.1 percent. Its previous record high operating profit and revenue were 7.2 trillion won in 2008 and 68.9 trillion won in 2011, respectively.

Shares of POSCO closed 0.33 percent higher at 306,500 won on Thursday.

The company attributed the upbeat results mainly to the global economic recovery from the 2020 Covid-19 crisis that buoyed steel demand world-wide. Demand for POSCO steel products also surged after China has reduced the country’s steel production to lower carbon emissions ahead of the 2022 Winter Olympics in Beijing.

After the price of iron ore, which steel is made from, jumped driven by the strong global steel demand, POSCO has succeeded in raising the prices of its steel products, too. Iron ore prices rose 40 percent from $161.8 per ton on January 1, 2021 to $226.46 on May 14, 2021, according to the Korea Mine Rehabilitation & Mineral Resources Corp. (KOMIR), a public agency in Korea that oversees national resource security. In line with it, POSCO increased profitability by raising the price of its flagship products such as hot-rolled steel, steel plate, automotive steel.

POSCO on the same day announced that it has successfully produced and shipped neon, a rare gas that is essential for semiconductor production, at its Gwangyang steel mill with its own proprietary technology for the first time in the country. This is one of the company’s environmental, social, governance (ESG) achievements it has been pursuing.

By Moon Gwang-min and Susan Lee

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