Steel major Hyundai Steel has recently concluded price negotiations for heavy plates with major domestic shipbuilding companies at KRW 11,00,000/t ($860/t). Price levels have reduced by KRW 1,00,000/t ($78/t) in H2CY’22, while other steelmakers like POSCO’s negotiations are not completed yet and still in progress.
Shipbuilders are seeking for large price cuts during negotiations this time as prices of raw material and finished steel have been declining since May 2022.
Shipbuilders were heavily dependent on imported heavy plates despite of normal supply of plates from domestic plate manufacturers. This was mainly due to increase in heavy plates imports to the country. For instance, import volumes of heavy plates into South Korea have surged by 58.6% y-o-y to 1.56 million tonnes (mnt) during January-November 2022.
In addition, increasing burden of manufacturing costs and rise in imports from countries like China and Japan have reduced the heavy plate capacity utilisation rate of plate makers.
Market participants opine that price negotiations for heavy plates are time taking and requires manpower, which is repeated every year. They have also raised a concern that the method is not helpful and lacks relationship building and trust between the companies.
Note: This article has been written in accordance with an article exchange agreement between SteelDaily and SteelMint.
Leave a Reply