Posco, one of the world’s largest steelmakers, has warned that a strong dollar and weak Korean won are inflating the cost of imported raw materials and dragging down profitability, at the same time the company is grappling with subdued steel demand from the global economic slowdown.

The dollar’s surge to a 20-year high has raised concerns about depressed global economic growth. Despite rallying in recent weeks, South Korea’s currency has depreciated nearly 10 per cent against the dollar in 2022. A property market downturn in China, the world’s biggest steel market, has also weighed on Posco’s earnings.

“The exchange rate is having a big impact on us as we have to purchase raw materials in dollars,” said Kim Hag-dong, the company’s chief executive, during an interview at the company’s sprawling headquarters in Pohang on South Korea’s south-east coast.