Alternative materials, not China, are threat to auto steel, Posco says

South Korean steelmaker Posco has dismissed Chinese competitors and pinpointed alternative materials as a major cause for concern for its automotive steel business.

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“The concerns are with the threat from alternative materials, such as plastic and aluminium, and increasing demand for them,” a Posco executive said in a meeting for investors and analysts late last week.

He was replying to a query about Posco’s strategy amid a continuing expansion of production capacity in automotive steel by Baosteel, China’s largest automotive sheet steelmaker.

“Posco started investing in automotive steel 15 years ago, which allowed us to gain an advantage over our global peers,” the executive said, according to a transcript of the conference posted on Posco’s website.

“Our technology [has proven to be the] best in fulfilling needs for light weight, and producing high-strength steel,” he added.

Alternative materials have been posing “challenges”, however, the executive admitted.

He cited Ford’s F-150 truck, which was unveiled early in 2014 with aluminium used for all its body parts.

“However, due to the recent oil-price drop, Ford has redesigned the model and [kept] aluminium [in the] outer frame, while changing inner parts back to steel,” he noted.

“Although this proves there is still room for steel, Posco fully recognises the approaching challenges,” he said. “We will continue our research [into ways] to apply [particular qualities] of alternative materials into steel and develop advanced combined steel.”

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