Posco (Zhangjiagang) Stainless Steel Co., Ltd. (PZSS) is the sole stainless steel joint venture of South Korea’s Posco (POSCO) in China. Located in Zhangjiagang, Jiangsu Province, the company began construction in 1995 and officially began production in 1997. Using an electric arc furnace process, it has a planned crude steel production capacity of 1.1 million tons per year. As a key platform for Posco Group to enter the Chinese stainless steel market, PZSS is not only a significant investment project by South Korea in China, but also a significant player in the Chinese stainless steel industry.
Company Overview
Posco (Zhangjiagang) Stainless Steel is a joint venture between Posco Group and Jiangsu Shagang Group. Posco Group and its Chinese subsidiary hold an 82.5% stake, while Shagang Group holds a 17.5% stake. PZSS boasts integrated production lines from steelmaking to hot and cold rolling, making it Posco Group’s largest stainless steel production base in China. However, overcapacity in the Chinese stainless steel market in recent years has severely impacted PZSS’s profitability, resulting in an operating loss of US$130 million in 2023, making it the largest loss-making company among Posco’s overseas subsidiaries.
Major Shareholding Changes
At the end of 2024, POSCO confirmed that it was in talks with potential buyers for the sale of PZSS. In July 2025, POSCO reached an agreement with China’s Tsingshan Holding Group to transfer its 82.5% stake to Tsingshan Holding for approximately 40 billion won (US$291 million). This transaction will make Tsingshan Holding the controlling shareholder of PZSS and POSCO will exit the project.
According to the agreement, Tsingshan Holding’s management team is expected to officially take over PZSS on July 9, 2025, while Shagang Group will retain its 17.5% stake. This acquisition marks a strategic divestment of POSCO’s stainless steel business while also providing Tsingshan Holding with an important platform for entering the Chinese market.
Capacity and Production
PZSS’s electric arc furnace capacity is 1.1 million tons of annual crude steel, making it POSCO’s largest stainless steel production capacity in China.
Industry Environment and Challenges
When it was first established, PZSS was considered a successful example of a Sino-Korean joint venture. However, with the continued expansion of China’s stainless steel industry and a significant increase in production capacity, market competition is becoming increasingly fierce. By 2024, China will have 43 stainless steel companies with a total production capacity of 28.21 million tons, significantly exceeding domestic consumption (24.17 million tons). This oversupply situation has led to intense price competition and a decline in overall industry profit margins.
PZSS faces significant pressure in this market environment, particularly due to its relatively high production costs, which has led to a continuous decline in profitability.
Future Outlook
With the acquisition by Tsingshan Holding, PZSS is expected to integrate into Tsingshan’s existing integrated ferronickel-stainless steel industry chain, integrating raw material resources and gaining greater cost advantages. Tsingshan Holding is one of the world’s largest ferronickel and stainless steel producers, owning several large steel mills and a ferronickel base in Indonesia. Through this acquisition, PZSS will gain access to more stable nickel resources and a more advanced production management system, which is expected to improve production efficiency and enhance its market competitiveness.
