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| Contract Renewal Talks On Japanese Ship Plate Exports To ROK |
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Japanese integrated steelmakers are scheduled to start negotiations this week on contract renewals of their exports of ship plates (heavy plates for shipbuilding) to South Korea's major shipbuilding companies such as Hyundai Heavy Industries Co for shipments in October 2009-March 2010. The Japanese steelmakers are expected to offer the terms of what they export in a day or two so that they will struggle to settle the negotiations by mid-August. Chances are the Japanese steelmakers will aim to recover a price level of US$700/ton FOB in the negotiations. In this connection, specified price adjustments apply in the existing supply contracts of ship plates with the Korean shipbuilding companies. The price adjustments were made at the request of the Korean shipbuilding companies. For shipments in April-September 2009, the Japanese steelmakers concluded their supply contracts of ship plates with the Korean shipbuilding companies at around US$700/ton FOB each. Then, the Korean shipbuilding companies negotiated ship plate purchases from China's major steelmakers at around US$480/ton FOB each. As a result, a price spread of nearly US$200/ton arose between Japanese and Chinese ship plate exports to South Korea. The Korean shipbuilding companies reacted with their request for a review of the contract prices for ship plate supplies from Japan. Then, the Japanese steelmakers responded with separate price adjustments in their ship plate exports under contract with the Korean customers. In South Korea, integrated steelmaker Posco currently charges W820,000/ton for domestic sales of heavy plates. The asking price translates into US$656/ton at an exchange rate of US$1.00-W1,250. By comparison, the adjusted Japanese prices in the existing contracts of ship plate exports to South Korea are lower than Posco's domestic sales price of heavy plates. Heavy plate exports out of Japan to South Korea stood at a cumulative 257,000 tons in April-May 2009, down 10.2% from the same period of 2008. The slack export performance is believed to have ensued from a fall in South Korea's heavy plate consumption, particularly in the shipbuilding sector. South Korea's various shipbuilding companies face falling intakes of new ship orders, leading to the ensuing slowdown in local shipyard operations. |
| last modified : Thu 16 Jul, 2009 [10:33] |
