June 9, 2010 / 9:37 AM / 10 years ago

UPDATE 1-POSCO CEO sees domestic market oversupply in H2

* Local market oversupply, rising imports seen weighing in H2

* POSCO to decide on adjusting utilisation ratio from August

* Q3 steel prices to be set late June or early July - exec (Adds details)

SEOUL, June 9 (Reuters) - South Korea’s POSCO (005490.KS) expects a difficult business environment in the second half because of oversupply in the domestic market and increasing steel imports, its chief executive said.

The world’s No.4 steelmaker expected domestic demand to grow 10 percent or more this year, Chief Executive Chung Joon-yang said at a local industry event on Wednesday.

Asia’s steel market has sagged since hitting a high in the middle of April and China’s Baoshan Iron and Steel Co (600019.SS), the world’s largest steelmaker, has cut its July prices as traders are wary of the demand outlook for China, the world’s top steel producer and consumer.

Kim Jin-il, a senior executive vice-president at POSCO, told Reuters on the sidelines of the event that the company planned to run its plants at full capacity until July, but added that the utilisation ratio from August would depend on market conditions.

Kim also said POSCO would decide on third-quarter steel product pricing soon, following negotiations with raw materials providers.

“We will decide how much we will raise prices by late June or early July,” Kim said.

POSCO raised prices for its benchmark steel product by 25 percent from May, the company’s first price adjustment in a year, to reflect rising global steel and raw materials prices.

The world’s No.2 and No 3 iron ore suppliers, Rio Tinto (RIO.AX) and BHP Billiton (BHP.AX), had notified Japan’s steelmakers that they wanted to raise iron ore prices by 22-23 percent in July-September from the previous quarter, a source said on Tuesday. [ID:nSGE6570EL]

Another POSCO executive said the South Korean company had also received price offers from miners, but declined to elaborate. (Reporting by Cho Mee-young, writing by Rhee So-eui; Editing by Chris Lewis)

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