Price negotiations of heavy plates for shipbuilding are less likely to get concluded in H2CY22, as per SteelDaily reports, as there is wide price disparity between shipbuilders and heavy plate manufacturers. Shipbuilders seek for large price cuts, while plate makers are forced to either adjust prices based on manufacturing costs or reduce their contract volumes.
In the current method being followed, heavy plates are continuously supplied without a price being determined during the price negotiation process. This unilaterally unfavourable structure of heavy plate makers continues every year.
Since prices are not determined during each negotiation process and products are supplied, there are certain cases where the negotiations get delayed or there is difficulty in negotiation during times of rising raw materials and steel prices in the global market.
In addition, the order quantity for the already agreed upon domestic quantity was significantly reduced while the quantity of imported goods – which were relatively low in prices – was increased. Demand for lowering prices of domestic supplies to match imported prices also increased. This was mainly because products were supplied before making decisions on price negotiation.
The heavy plate and shipbuilding industries require a rational pricing formula for determination of negotiation prices and volumes, otherwise the unfavourable method will lead to an opportunity cost next year.
Note: This article has been written in accordance with an article exchange agreement between Steel Daily and SteelMint.
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