Higher steel prices hit Daewoo

Daewoo Shipbuilding & Marine Engineering (DSME), the world’s second-largest shipbuilder, said its profit fell 44% from a year earlier last month because of higher steel prices. Net income in July fell to $18 million from $19.4 million a year earlier, DSME said in a statement to the Korea Stock Exchange. Operating profit dropped 2.9% to $20.5 million, while sales rose 48% to $401 million.

The price of steel plates, about 18% of a shipbuilder’s costs, rose as much as 70% this year, driven higher by demand from China. DSME and other shipbuilders have said their profits may drop because of high steel prices. The spot price of hot-rolled steel imported by China, used as an Asian benchmark, rose 49% to $450 per tonne in the past year, according to the Metal Bulletin. China used 36% of the world’s steel last year.

Posco, South Korea’s largest steel maker, raised the price of steel plates used in ships 38% this year to $477 per tonne.