POSCO Annual Report

Myoung-Rae Cho
Engineer Cold-Rolling Technology Development Group

“In February 2003, we entered a general technology cooperation agreement with Salzgitter Flachstahl of Germany to jointly develop higher quality steel for the automotive industry. We expect the partnership to lead to even more efficient cold-rolling processes and shorter development cycles for new grades and techniques, enhancing the competitiveness of both companies in this value-added sector.”

As a global leader in steel, we continually strive to achieve the highest level of technical excellence, developing the higher-quality products and cost-effective production processes that will give us a superior competitive edge. In 2003, we invested KRW 233.3 billion in R&D?just over 1.6% of sales?in our pursuit of technical leadership in six strategic fields: automotive steel, linepipe steel, ferritic stainless steel, high-grade electrical steel, FINEX ironmaking, and high-strength structural steel.

Automotive Steel
In 2003, we sold 2,722,000 tons of automotive steel. Opening in January 2003, our Automotive Steel Application Center is the base for our early vendor involvement programs with all four Korean automakers and three overseas firms. In March 2003, we commissioned a state-of-the-art tailor-welded blank plant capable of laser welding 1.7 million blanks annually, and a project to boost capacity to 3.6 million blanks annually by October 2004 is now well underway. We also plan to commission two hydroforming production lines by March 2005 that will enable us to produce complex part designs that are both light and strong.

Linepipe Steel
In 2003, we delivered 1,140,000 tons of API-specification linepipe for China's West-East Gas Pipeline project and a number of other projects worldwide. Since early 2002, we have developed hot-rolled X70 and X80 grades as well as P110 grade for oil wells. We are now developing production technology for X100 grade steel as we work to establish ourselves as a major supplier through joint R&D projects with Russia's Bardin Institute and technical alliances with international pipemakers.

Ferritic Stainless Steel
In April 2003, we commissioned the Pohang No. 3 Stainless Steelmaking Plant and the Pohang No. 3 Annealing & Pickling Line, increasing capacity by 360,000 tons and making our Pohang Works one of the world's largest ferritic stainless steel production facilities. Consistent with our long-term capacity expansion plans, we continue to pursue breakthroughs in productivity and low-cost processing which will make us even more competitive. Toward this end, we have optimized key processes such as argon-oxygen decarburization, slag control, and low-temperature, low-speed rolling as well as developed a cost-effective manufacturing process that runs on a conventional tandem cold-rolling mill.

Strategic expansion
Capacity expansion goes hand-inhand with our focus on value-added products. In 2003, we added a third stainless steelmaking plant, boosting our stainless steel capacity by nearly 600,000 tons to 1.66 million tons. In 2004, we'll be moving ahead with plans to boost automotive steel production, breaking ground for our fifth and sixth continuous galvanizing lines that will add 850,000 tons of steel capacity by 2006.