China steels POSCOs market

Korean shipbuilders and POSCO, South Korea?s largest steel maker, are on a collision course over the price of steel sheets used for building ships with the low-priced Chinese products set to make a foray into the Korean market. The Korea Shipbuilders? Association (KSA) said Korea?s major shipbuilders, including Hyundai Heavy Industries and Samsung Heavy Industries, are considering increasing steel imports from China to cut costs. Korean shipbuilders are diversifying sources of import to reduce uncertainties amid rising steel prices.

Hyundai will increase Chinese steel imports from the current 10% to 15-20%. Samsung has also decided to increase Chinese steel imports by solidifying partnerships with Chinese steel makers. Daewoo, which has not used Chinese steel, is also in talks with Chinese steel firms to import their products.

The moves are likely to be a serious setback to POSCO, already suffering from dwindling profits due to strong competition with Chinese rivals. Last week, the firm said it will lower prices of 11 steel products sold here by up to 70,000 won per tonne because its stocks of steel are piling up.

Imports of cheap Chinese steel products for common use exceeded 4.9 million tonnes as of August, already 600,000 tonnes more than last year?s volume. “China is turning into a threat for POSCO,” a company official said. “We are concerned over a fast inflow of Chinese steel products to Korea.”