Aug. 29 (Bloomberg) -- Posco (005490), the world’s second-biggest stainless-steel maker, will cut domestic prices of the alloy used mostly in buildings by as much as 2.7 percent next month, following a decline in the cost of nickel, a key raw material.
Prices of 300-series hot-rolled coils will decline by 100,000 won ($92) a metric ton to 3.6 million won in September from this month, the Pohang, South Korea-based company said today in an e-mailed statement. Prices of 300-series cold-rolled products will be reduced by the same amount, or 2.5 percent, to 3.87 million won, it said.
Nickel declined about 16 percent this month along with losses in copper and aluminum on concern the cut in the U.S. credit rating by Standard & Poor’s will dampen the global economy, eroding demand for industrial metals. Stainless-steel companies are the world’s biggest users of nickel.
“The domestic stainless steel market has weakened as nickel prices fell sharply following the U.S. credit rating downgrade in early August,” Posco said in the statement. “The weakness in the market is regarded as a result of concerns about a global fiscal crisis not as a result of demand reduction, and market conditions are expected to improve in the peak-demand season in September and October.”
Prices for 400-series stainless steel, used in home appliances and cars, will be left unchanged next month, Posco said. The 400-series uses ferrochrome as the key raw material.
Nickel for three-month delivery on the London Metal Exchange rose 0.9 percent to $21,030 a ton at 4:16 p.m. in Seoul.
Posco shares dropped 0.4 percent to close at 385,500 won in Seoul trading, compared with a 0.8 percent advance in the local benchmark Kospi index. (KOSPI) The price reduction announcement came after the stock market closed.