Samsung doubles steel purchases from China

Samsung Heavy Industries in South Korea will more than double purchases of steel plate from China next year because it can’t get enough from suppliers in South Korea and Japan. The company will rely on China next year for 21% of the 5 mm to 20 mm-thick slabs used to make vessel hulls, compared with 9% in 2006.

The world?s three largest shipbuilders, Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering and Samsung, are buying more steel to deliver 1,116 vessels on order, valued at a record $90.3 billion. Hyundai is also buying a $53 million stake in a Chinese steelmaker to guarantee supplies at a lower cost and depend less on its main sources in South Korea and Japan.

Samsung has a preliminary agreement to buy 150,000 tonnes of the slabs from Shougang Group of China, bringing next year’s purchases from the country to 250,000 tonnes.

Steelmakers have roughly doubled the price of steel plate since 2003 to about $600 a tonne because of increased demand from shipyards and higher costs of iron ore used to make steel products. Posco, South Korea’s largest steel company, and other Asian steel mills are investing to increase output.