Korean shipbuilders fight steel price hike

The Korean Shipbuilders? Association (KSA) is strongly resisting a hike in steel prices by Japanese steel makers who are attempting to increase the price of steel plates by $100 per tonne from the second quarter this year. Official negotiation will start next week.

KSA says that the price per tonne for steel plates imported from Japan was last year increased from $340 to $600. In addition, the strengthening of the Won has caused most Korean shipbuilders to suffer operating losses and it is, therefore, hard to accept any additional increases in costs. If Japanese steel makers insist on the proposed price increase, Korean shipbuilders will be forced to seek supplies from other countries, such as China, and the setting up of a consortium with Korean steel makers.

KSA claims that the additional cost of 20% incurred by Japanese steel makers for iron ore and coke last year was fully reflected in their export prices which were increased by 76.5%. Korean shipbuilders also feel aggrieved by the fact that Japanese steel makers are not intending to increase steel plate prices to Japanese shipbuilders.

Posco, the Korean steel producer, will provide an additional 400,000 tonnes of steel plate thanks to improvements in productivity and by switching 150,000 tonnes destined for other industrial use. Posco said that thick steel plate prices this year would not be reduced. In addition, Dongkuk Steel will secure an additional 600,000 tonnes of steel ingot slabs this year from Chinese foundries. KSA said that Korean shipbuilders imported 1.5 million tonnes of thick steel plates from Japanese steel makers last year.