Posco divests Chinese JV to focus on US, India growth

A worker walks by unfinished rolls of stainless steel in a Posco subsidiary in Qingdao city in China's Shandong province. (Getty Images)

South Korea’s steel giant Posco Group has sold its entire stake in a Chinese steel joint venture as part of a restructuring drive to shed low-profit businesses.

According to industry sources on Thursday, the group’s holding company, Posco Holdings, signed a deal to transfer its 82.5 percent stake in Zhangjiagang Pohang Stainless Steel to China’s steelmaker Tsingshan Holding Group, in a deal valued at around 400 billion won ($291 million).

Founded in 1997 to tap into China’s stainless steel market, ZPSS is a joint venture owned 58.6 percent by Posco Holdings, 23.8 percent by Posco China and 17.5 percent by China’s Jiangsu Shagang Group.

The decision comes amid an aggressive overhaul led by Chairman Chang In-hwa, who is redirecting resources to high-growth regions such as the US and India by disposing of underperforming operations. The group secured 662.5 billion won in cash by divesting 45 businesses by the end of last year.

ZPSS has an annual capacity of 1.1 million metric tons, more than half of Korea’s domestic stainless steel output. In 2006, it grew into the company’s first integrated stainless steel production facility outside Korea.

However, the business has struggled in recent years amid China’s sluggish economic recovery and a persistent supply glut in the steel industry. Last year, its annual sales fell 9 percent on-year to 3.42 trillion won, while it posted a net loss of 129.9 billion won, bringing cumulative losses since 2022 to 377.2 billion won.