Shares in POSCO surged as much as 9.8% to their latest record on Friday, on expectations the world's fourth-biggest steel maker will report a surge in quarterly profit next week. POSCO may post a stellar second quarter, with results due out on Monday, thanks to higher steel prices and strong demand for more lucrative high-end products, analysts said.
Talk about further global consolidation in the metals sector also helped lift POSCO shares after Rio Tinto agreed to buy Canada's Alcan for $38.1 billion, creating the world's biggest aluminum company.
"The market is revaluing POSCO's share prices due to anticipation of strong earnings. POSCO's operating profit will hit 1.2 trillion won ($1.31 billion), up more than 27% from a year ago," said Park Sang-kyu, an analyst at Hyundai Securities.
The South Korean steel maker is forecast to report April-June net profit of 941 billion won ($1.03 billion), according to seven analysts polled by Reuters -- up 32.5% from a year ago.
Sales are expected to have risen 26.8% to 5.92 trillion won from 4.67 trillion won a year earlier.
POSCO could benefit from continued demand for steel in the second half of the year, analysts said, although earnings growth momentum could slow, partly due to falling orders for stainless steel.
The steel maker last week cut stainless prices, citing tumbling nickel prices, a key raw material in the alloy.