Daewoo may show loss

Daewoo Shipbuilding & Marine Engineering (DSME) may report losses for the first quarter after steel costs rose dramatically. DSME is expected to report a net loss of $27 million, according to financial analysts, compared to a profit of $100 million for the same period last year.

Daewoo, Hyundai and Samsung are paying as much as 70% more for steel to build ships that were ordered in 2002 and 2003, when the price of tankers fell to a 10-year low. Vessel prices have more than doubled since 2002 and the companies’ shares have risen as much as 48% as investors anticipate a return to profit.

According to industry sources, the first quarter will be the worst and the expectation is that, by the fourth quarter, the shipbuilders will be profitable again.