Dongbu Steel to Raise Operating Income Margin to 12% in 2012

Dongbu Steel, South Korean major steel maker, aims to increase operating income margin to 12% along its mid-term management plan for 2010-2012. For 2010, the firm targets 5-6%. The firm started operation of a new electric furnace and a hot rolling mill with a crude steel output capacity at 3 million tonnes per year in 2009. The firm plans to expand the capacity to 8 million tonnes in future. The firm will materialize a concrete plan for the expansion in the first half of 2010. Dongbu Steel draws a growth strategy to increase the competitive power for its integrated production system. The strategy will include construction of a new rebar plant with an electric furnace.

Han Kwang-Hee, vice chairman of Dongbu Steel, revealed about the mid-term plan at an interview with Japan Metal Bulletin. The firm aims the top-class competitive power for cold rolling, surface treatment and electric furnace businesses. The firm seeks measures to manufacture rebar by utilization of low grade ferrous scrap or to collect steel materials more effectively.

Dongbu Steel’s hot coil production totaled 400,000 tonnes in 2009. The firm plans to increase the output to 2.3 million tonnes in 2010 and 3 million tonnes at full operation in 2011. The firm also aims to raise the rate of using self-made hot coil to 60-70% from current 50%.

Mr. Han forecasted the firm’s revenue would increase to 3.4-3.6 trillion won in 2010 from 2.6 trillion won in 2009 and the operating income margin would improve to 190 billion won or 5-6% in 2010 from small black in 2009. He expected the sales volume would keep flat for cold rolled and surface treated sheets at 2.4 million tonnes except for wire rod in 2010.