POSCO, South Korea’s largest steelmaker, plans to invest over 1 trillion won ($708 million) in an Indonesian stainless steel venture with China’s Tsingshan Holding Group, the same company that acquired its unprofitable Chinese operations just months earlier.
The partnership will construct a 2-million-ton annual capacity mill at Morowali Industrial Park on Sulawesi island, with POSCO acquiring a 44.12% stake in PT Xinheng Metal Indonesia. Tsingshan’s affiliate will retain the remaining 55.88% through PT Makmur International Investment PTE.
The move marks a strategic retreat from China, where POSCO sold its Zhangjiagang facility to Tsingshan for 400 billion won ($300 million) in July after accumulating losses exceeding 170 billion won in 2023 alone. Industry officials cited aging facilities and uncompetitive technology as factors behind the divestment.
The timing raises questions given current market headwinds. Stainless steel prices in Asia have shown signs of stabilization early this year, with 304 cold-rolled coil prices hovering at $1,875 per tonne, while the global nickel market faces persistent oversupply. Indonesia aims to cut its nickel mine quota from 272 million tons in 2024 to just 150 million tons in 2025 to support struggling prices.
POSCO’s investment comes as Indonesia’s stainless steel capacity has surged to 7.5 million tons by 2024 from virtually zero before 2017, intensifying competition in an already oversupplied market where demand remains subdued.
