| The TEX Report Topics < Steel > | |
| HOME >> Topics List >> August, 2008 >> 20 (Wed) |
| NSC In Advanced Talks On Q4 Heavy Plate Exports At Y150,000 FOB |
|
Nippon Steel Corp (NSC) finds itself in advanced stages of negotiations on its heavy plate exports at a yen-denominated price of Y150,000/ton FOB to shipbuilding companies and construction machinery manufacturers in South Korea and China for shipments in the October-December quarter. NSC claims to have concluded the negotiations with several customers by the first half of this week except Hyundai Heavy Industries Co (HHI). But NSC keeps mum about the names of those customers. Indications are that it will take NSC a fairly long time to settle its negotiations with HHI because the two sides are widely divided on price. NSC finds it difficult to make a concession to HHI alone since the Japanese steelmaker has already concluded several export contracts of heavy plates at a yen-denominated price of Y150,000/ton FOB for October-December shipments. As a result, NSC indicates a position to wait until "the time is ripe" for a settlement with HHI. NSC's yen-denominated offer of Y150,000/ton FOB this time is intended to get a price increase of Y35,000/ton on the price under contract with China's shipbuilding companies for July-September shipments and another price increase of Y55,000/ton on what is agreed with South Korea's shipbuilding companies for the corresponding shipments. It was forecast earlier that NSC would certainly face difficult negotiations with Chinese and Korean shipbuilding companies this time despite tight supply-demand conditions for heavy plates in Asia and elsewhere. NSC, though, has succeeded in concluding its heavy plate export negotiations with several customers earlier than expected for October-December shipments thanks to a depreciating yen to the US dollar. A price of Y150,000/ton FOB translates into US$1,360/ton FOB at an exchange rate of US$1.00-Y110. NSC has already negotiated dollar-denominated terms of US$1,700-1,800/ton FOB in its exports of heavy plates to Russia as UO pipe material. Given the prices settled for Russia, NSC's offer price for October-December shipments amounts to a lower price level by the equivalent of US$400-500/ton for the shipbuilding and construction machinery industries of South Korea and China. Also, Chinese heavy plates are reported to have sold at a price level of US$1,300/ton C&F for South Korea of late. Until now, NSC's export prices of ship plates (heavy plates for shipbuilding) for South Korea have served as a benchmark of heavy plate transaction prices in Asia. Therefore, South Korea's shipbuilding companies are apprehensive that if they accept a price increase of Y55,000/ton for ship plate imports from NSC, it could bring a major price increase for ship plate imports from Chinese steelmakers, leading to domestic price increases of heavy plates by South Korea's integrated steelmaker Posco and electric steelmaker Dongkuk Steel Mill Co. Actually, though, NSC's export prices in point are seen as having a less impact on Asian market conditions than before. South Korea's ship plate demand usually totals 9,000,000 tpy. On the supply side, Posco covers 35% of what is required, Dongkuk Steel 20%, Chinese products 25%, and Japanese products 20%. Posco's present domestic price of heavy plates is settled at W920,000/ton, a price that translates into Y97,000/ton. By comparison, what Japan's integrated steelmakers currently charge for domestic sales of ship plates stands at Y95,000/ton after a considerable price increase, which indicates a price settlement that compares with Posco's domestic price. Accordingly, it is understood that Japanese export prices of heavy plates have no relation with domestic prices. Meanwhile, Dongkuk Steel's domestic price of heavy plates is linked to what the company pays for the procurement of slabs. In this connection, the world's slab export prices are forecast to come down for October-December shipments. As a result, there is speculation that Dongkuk Steel may keep its heavy plate price unchanged for Q4 shipments at home. |
| last modified : Mon 25 Aug, 2008 [11:10] |
