JFE Steel starts Q3 SBQ plate exports talk with South Korea

Monday, 17 May 2010
TEX JFE Steel has started negotiations with the offer price of USD 900 per tonne FOB on its export deals of ship plates with South Korea's two major shipbuilding companies for shipments in the July to September quarter.

According to market sources, it is likely that JFE Steel will face a prolonged process of the negotiations, given a tough environment for South Korea's various shipbuilding companies.

In Asia, transaction prices of heavy plates are trending upward. In Southeast Asia, the going price levels stand at a level of USD 800 per tonne FOB for June shipments to Singapore, up from around USD 600 per tonne FOB for April shipments. In South Korea, POSCO and Dongkuk Steel Mill Co have raised their domestic sales prices of heavy plates by KRW 80,000 to KRW 900,000 per tonne each from May shipments. In Taiwan, China Steel Corporation has increased its domestic sales price of heavy plates by TWD 1,800 to TWD 26,600 per tonne for June shipments.

Behind rising prices of heavy plates in Asia lies a combination of factors. Among other things, there is a recovery of heavy plate demand in sectors other than shipbuilding such as the construction machinery industry. Besides, there are repercussions of surging prices of iron ore and coking coal, essential raw materials for blast furnace operations at the works of major integrated steelmakers across Asia.

In South Korea, meanwhile, local shipbuilding companies have won lots of orders for bulk carriers of late to meet idle capacity at their shipyards. They are believed to concluded that they will be able to secure necessary heavy plates at low prices. But it is understood that they have run into unexpected procurement difficulties when it comes to actual purchases of heavy plates. For one thing, POSCO is scheduled to execute regular repairs of heavy plate mills at the company's Pohang works. Also, Dongkuk Steel is said to have run into trouble with heavy plate production at its works. For another factor, the Korean shipbuilding companies have put up strong resistance to what China's major steelmakers such as Baosteel Co are seeking as price increases in their export deals of heavy plates with the Korean customers.

In this connection, South Korea's intakes of new shipbuilding orders are on the decrease for a long term. But local shipbuilding companies' purchase volumes of heavy plates indicate no marked fall as they are obligated to meet the existing ship orders.

(Sourced from TEX Report Limited)