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| Chinese Ship Plate Export Talks On Q1'09 Shipments To ROK |
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China's major integrated steelmakers have begun negotiations on their exports of ship plates to South Korea for shipments in the January-March quarter of 2009, according to information made available in Tokyo. Prices on offer from the Chinese steelmakers are unknown. But it is understood that the offer prices stand at a level of US$600-700/ton C&F, a price level that is lower by nearly US$200 than what was settled when the Chinese steelmakers held negotiations on their ship plate exports to South Korea for October-December shipments this year. At the time, the Chinese steelmakers were said to have negotiated their deals at around US$900/ton C&F. There are increased cases of a crisis for small and midsize shipbuilding companies both in South Korea and China in the wake of various shipowners' canceled ship orders one after another. The canceled orders so far are estimated to have totaled nearly 100 for tonnage such as bulk carriers and oil tankers. There is even information the world's canceled orders have already totaled 200 or more for new shipbuildings, with a rising number of cancellations. In China, the canceled ship orders have cost small and midsize heavy plate manufacturers local outlets for their products that are usually sold to small and midsize shipyards at home. As a result, they are reacting with enhanced efforts to sell heavy plates to major shipbuilding companies both in China and South Korea. On their part, China's major integrated steelmakers have reduced domestic prices of ship plates by Yn1,000/ton (US$147) or more for December or January shipments so that they can maintain their shares of ship plate deals at home. They have a considerable price reduction in effect as to ship plate exports, too, compared with what they have charged before. In South Korea, the current domestic prices of ship plates are W920,000/ton for products from integrated steelmaker Posco and W1,410,000/ton for those from electric steelmaker Dongkuk Steel Mill Co. The former's sales price translates into US$657 and the latter's into US$1,007 at an exchange rate of US$1.00-W1,400. As a result, it is understood that offer prices of ship plates from China's major integrated steelmakers for January-March shipments to South Korea compare with Posco's domestic price. Besides, the Chinese prices on offer this time are viewed as close to half the negotiated price level of US$1,300-1,400/ton FOB for South Korea in the July-September quarter of this year. As Japan's integrated steelmakers see it, it is unlikely that the Chinese steelmakers will successfully firm up their deals of ship plate exports to South Korea for January-March shipments even though their offer prices are seen as a fairly low level. As far as China's small and midsize heavy plate manufacturers are concerned, there is a predominant feeling that most of them will end up in no firm deal this time with South Korea's major shipbuilding companies. There are two main factors, according to market sources. First, the Chinese heavy plate producers had no hesitation in supplying even materials of inferior quality to the Korean shipbuilding companies when they were having a tough time securing their ship plate requirements in tight supply-demand conditions for heavy plates. As a result, the Korean shipbuilding companies incurred damage to their operations. Second, the Korean shipbuilding companies have assured ship plate supplies for the January-March quarter with negotiated purchases of Korean and Japanese materials. Still, it remains to be seen whether the Korean shipbuilding companies will opt to take low-priced ship plates on offer from China's major integrated steelmakers while canceling negotiated imports of high-priced ship plates from Japan. But no cause of friction such as a cancellation of the ship plates on order is likely to arise between the Japanese steelmakers and the Korean shipbuilding companies before contract renewal negotiations of ship plates between the two sides, most of the Japanese steelmakers believe. The contract renewal negotiations are scheduled for shipments in the first half (April-September) of fiscal 2009 (April 2009-March 2010). The two sides are expected to start their talks early next year. |
| last modified : Thu 18 Dec, 2008 [10:28] |
