Steel prices affecting Keppel

Singapore?s Keppel Corp, the world’s biggest builder of shallow-water oil rigs, has had to raise prices for its oil rigs and ships this year as rising steel prices impacted on its raw material costs. Steel prices have surged around 30% since late last year, fueled by China’s fast-growing economy.

Rig prices have gone up in excess of 10% since late last year and, while steel accounts for 15%-20% of raw material costs for rigbuilding, it accounts for even more in shipbuilding due to the higher steel content. VLCC prices have risen from a low of about $62 million 18 months ago to at least $75 million and shipowners have to wait until 2007 for delivery.