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Japanese Integrateds To Seek Price Hikes In Korean Deals For Ship Plates
Indications are that Japanese integrated steelmakers will seek price increases in negotiations on their exports of ship plates (heavy plates for shipbuilding) to South Korea's various shipbuilding companies for shipments in October 2009-March 2010. The negotiations are expected to start in late July.

The Japanese steelmakers are poised to begin their studies shortly on what price terms to offer in their ship plate export negotiations with the Korean customers. There are signs that the Japanese steelmakers are considering offering price increases of US$50/ton or beyond, given a strong possibility that transaction prices of heavy plates will hit bottom and turn up in Asia by October this year.

In Asian markets, heavy plate prices still stand at a low level. They are even lower than HR coil prices in some areas. But there is a high probability that heavy plate prices will bottom out and rebound by October amid world's rising HR coil prices.

Heavy plates are used as material for construction machinery and construction work as well as shipbuilding. In the field of construction, China's construction demand for heavy plates is on the increase in a recovery of demand, which is expected to bring a recovery of heavy plate prices over time. For an indicator, Anshan Iron & Steel Group Corp has raised its domestic sales price of heavy plates by Yn200/ton (US$30) for July shipments. It is likely that China's other major steelmakers, too, will opt to increase heavy plate prices in what they sell for July shipments.

As to heavy plates for construction machinery, various steelmakers in Asia are still operating at 20-30% of production capacity on the whole. In the summer of this year, though, there are expectations that domestic heavy plate production in Japan will recover to around 50% of capacity. It is understood that similar prospects exist for domestic heavy plate production in China and South Korea. Therefore, the current prices of heavy plates for construction machinery are seen as their floor, a phase that promises to bring a recovery of prices in the near future.

In South Korea, various shipbuilding companies have ship orders sufficient to cover their operations of up to 2011. As a result, local demand for ship plates holds steady at present.

As far as South Korea's shipbuilding industry is concerned, a domestic glut of heavy plates rather than ship plate demand poses a problem. In this connection, Posco, Hyundai Steel Co and Dongkuk Steel Mill Co are on track to commission new heavy plate mills at their works. Posco is slated to bring on stream the new heavy plate mill (annual capacity: 2,000,000 tons) at its Kwangyang works in the latter half of next year. Hyundai Steel's new heavy plate mill is due to go into operation in November this year, and Dongkuk Steel's in October. In the case of Dongkuk Steel, it is uncertain whether the company can secure a enough amount of slabs to feed the new heavy plate mill after the company has canceled its long-term slab purchase contract with Corus Group PLC. Besides, there are signs that Hyundai Steel faces an obstacle to its procurement of slabs from Japan for operations of the company's new heavy plate mill.
last modified : Wed 01 Jul, 2009 [10:29]
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