POSCO Q3 profit falls, hit by weak stainless steel

By Kang Shinhye

SEOUL (Reuters) - POSCO reported an unexpected fall in quarterly profit on Tuesday as stainless steel prices weakened, but the outlook for the world's fourth-largest steel maker is positive amid strong global demand.

The company also trimmed its full-year forecasts, lowering its 2007 operating profit forecast to 4.5 trillion won from 4.6 trillion and its 2007 sales forecast to 21.8 trillion won from 22.7 trillion.

But analysts expect strong prices for carbon steel products and recovering stainless steel prices to lift POSCO's current fourth quarter profit.

"We don't need to be disappointed about the third-quarter result, as the outlook for POSCO is very bright. I think the global steel sector is likely to be well supported by growth in investment booms in China and the Middle East," said Choi Yong-kyu, fund manager, at IBK-SG Asset Management.

The South Korean steel maker announced last week it would raise the prices of its steel plates for shipbuilding by 9.9 percent from Oct. 25, due to rising demand and higher raw material costs.

Global prices of steel products, particularly for shipbuilding, have risen as strong global trade prompts shipping lines to order more vessels.

The South Korean steel maker, which has been forging alliances to fend off feared hostile takeover bids, earned a net profit of 871 billion won ($949 million) for the three months to Sept. 30, against a revised profit of 882 billion won in the same period a year ago and 1.11 trillion won in the second quarter.

The result fell short of a consensus forecast of 922 billion won by seven analysts surveyed by Reuters.