Reuters reported that POSCO cuts its 2011 investment plan and painted a dim outlook after posting a 6% rise in quarterly profit that met market expectations. POSCO does not expect its capital expenditure to rise in 2012 after it slashed this year's investment plan by 18% to KRW 6 trillion.

Mr Choi Jong tae CFO of POSCO said that the steel maker’s fourth quarter operating profit may decrease to below KRW 1 trillion and that steel prices are expected to fall until the first half of 2012.

Mr Jong tae said that "Market conditions are not expected to improve next year from this year."

He added that "I expect our fourth quarter earnings to be the worst among this year."

He also said the firm's capital expenditure is unlikely to rise next year, after it slashed this year's investment plan by 18% to KRW 6 trillion.

POSCO said that it expected global steel prices to remain weak because of an oversupply, while demand growth is seen slowing due to sluggish economies in advanced countries and China tightening. It added that "At home market, Korea turned into a net steel exporter because volume growth outpaced steel consumption growth. Demand decline is expected to continue in the second half because of sluggishness in major industries."

Mr Kim Se hoon, a fund manager at Assetplus Investment Management, which owns POSCO shares said that "Unless the global economy gets better and sparks demand, POSCO's steel business will stagger for at least two to three years, pressured by low end Chinese products, global oversupply and its domestic rival Hyundai Steel growing fast."

(Sourced from www.reuters.com)