POSCO Annual Report

Xin Feng In (left)
Salesman, Shanghai Office
POSCO China Holding Corporation

La Shu Juan (right)
Accountant, Shanghai Office
POSCO China Holding Corporation

"Although POSCO has operated an office here in Shanghai since 1992, the launch of POSCO-China in November 2003 signals that this is a company committed to putting down roots in China. This idea of partnership is symbolized by the hyphen in our corporate logo. We're not here to exploit the Chinese market, we're here to help it reach its full potential. And that's a win-win proposition we Chinese can relate to."

A year after surpassing the United States as the world's top importer of steel, China's insatiable appetite for steel continued to set new records in 2003 at 266 million tons. No other international steelmaker is more at home in this market than POSCO. We've invested in local projects valued at US$838 million to date, and we're committed to others valued at US$1.41 billion through 2006. And our global vision has only just begun to dawn.

Our business in China dates back to 1991 when we established our first office in Beijing. Over the past 12 years, we have pursued a comprehensive business strategy here, directly investing in facilities to produce value-added products in key industrial centers across the nation as well as sourcing coal and other raw materials locally. Today, we are supplying the advanced steelmaking technology and capital this dynamic market demands through a growing network of downstream processing mills producing galvanized sheet, prepainted sheet, electrical sheet, and cold-rolled stainless steel, proving ourselves to be a valuable partner in growth.

Zhangjiagang POSCO Stainless Steel Co., Ltd., an 82.5:17.5 joint venture with Jiangsu Shagang Group in Jiangsu Province, produces up to 120,000 tons of galvanized sheet and 280,000 tons of cold-rolled stainless steel annually. Responding to rising local demand, ZPSS doubled its stainless cold-rolling capacity in September 2003. ZPSS saw 2003 sales rise 32.8% to US$538 million, while earnings fell by 47.7% to US$15.7 million due to capacity expansion.

Dalian POSCO-CFM Coated Steel Co., Ltd., a 55:30:15 joint venture with China National Ferrous Metal Material Corporation and SK Networks in Liaoning Province, produces up to 100,000 tons of galvanized sheet and 150,000 tons of prepainted sheet annually. While sales rose 8.5% to US$115 million in 2003, PCCS recorded a US$5 million loss due to a 100,000-ton prepainted sheet capacity expansion completed in March 2003 and increasing competition.

Shunde Pohang Coated Steel Co., Ltd., a 93.7:6.3 joint venture with Beijiao Investment in Guangdong Province, produces up to 100,000 tons of galvanized sheet and 150,000 tons of electrical and prepainted sheet annually. In 2003, SHUNPO saw sales rise 27.6% to US$74 million, while earnings fell 74.5% to US$1.4 million due to the addition of a multi-coating production line for electrical and prepainted sheet that came online in February 2003.

Partners in progress
China is a formidable steel power, accounting for a fifth of the world's production and a quarter of its consumption. This as well as close proximity to Korea and rapidly growing local demand for high-quality steel products makes the Middle Kingdom a key market for us as we continue to shift our focus to value-added steel grades. By establishing POSCO China Holding Corporation, we aim to fully integrate ourselves with Chinese society as a partner for national growth.