Poongsan Corp., South Korea’s top copper processing company, is expected to benefit as China’s exit from the zero-COVID policy bolstered prices of the industrial metal.
Copper prices stood at $8,231.5 per ton as of Dec. 16, up 17.6% from a 20-month low of $7,000 hit on July 15 due to concerns over a global economic downturn, according to the Ministry of Trade, Industry and Energy.
The non-ferrous metal prices have been rising this month as China relaxed restrictions against COVID-19 and took measures to support the ailing local property market, analysts said.
Poongsan’s earnings often track copper prices as the company reflects them on product prices with its business to manufacture metal plates, rods, coins and stainless steel making up three-quarters of sales in the third quarter.
BETTER Q4 AND 2023Sales from the business fell 16% to 558.3 billion won ($428.8 million) in the July-September period on weak demand from industries such as the automobile, electrics, electronics and construction sectors.
“The fourth-quarter results are likely to be better as rising copper prices will cut losses from the business,” said a company official.
Its earnings are likely to improve further next year as the reviving copper demand is raising the metal’s prices. Its demand related to electric vehicle production is forecast to more than double to 5.3 million tons by 2030 from 2.4 million tons last year, according to Korea Investment & Securities Co.
The outlook for Poongsan’s defense business is also rosy. The operating profit of the division, which produces ammunition and propellant powder, was predicted to hit a record high this year due to the prolonged war in Ukraine and
strong exports.Write to Seo-Woo Jang at
suwu@hankyung.comJongwoo Cheon edited this article.
