Soaring shipbuilding orders of 2021 is expected to have a full-fledged impact in 2022, thereby leading to stronger demand of heavy plates. The demand of South Korean heavy plates for shipbuilding is expected to surge by more than 1.5 million tonnes (mn t) in 2022 compared to last year, i.e., from current 4.5 mn t to 6 mn t in CY’22.
Even if non- shipbuilding demand slows down, both production and sales are anticipated to improve compared to last year. Also, demand for non -shipbuilding and offshore wind power are expected to improve slightly.
Outlook of supply and demand of heavy plates in CY’22:
- Full-fledged recovery of heavy plate demand in 2022: The heavy plates demand, will recover in 2022 because of the shipbuilding orders received last year, leading to large heavy plates’ requirements for construction of container ships. As a result, it is predicted that the demand for heavy plates for shipbuilding in 2022 may exceed 5.5-6 mn t, depending upon the quantity of goods which will be imported into Korea.
If imports surge, then the production and sales of heavy plates in 2022 will most likely increase by 5-10% compared to last year. This is because construction investments are expected to improve while demand for shipbuilding is steadily increasing.
Meanwhile, exports are expected to continue to decline slightly compared to the previous year as domestic supply is prioritised.
In addition, if carbon-neutral-related investments, including the Korean New Deal begins, global offshore wind power demand can also be expected to a certain level, and heavy plate demand in 2021 is expected to recover to pre-COVID-19 levels.
- High possibility of slight price adjustment: Based on expectations for demand improvement of heavy plates, the profitability of heavy plates’ is expected to be difficult as compared to last year but it is expected to completely escape from the previous loss structure.
Although, shipbuilders are expected to actively demand price cuts from the first half of the year. Considering the decline in raw material prices such as iron ore and coking coal, it is difficult to expect a surge in the inflow of imported goods into Korea.
In case of China, it sees steady domestic demand and the export of high-value added products is expected to be prioritised.
While the prices of Japanese products is maintained, it is anticipated that it will be difficult for the infiow to increase sharply as the restructuring of heavy plates’ facilities is underway. Although, there is a possibility that imports will increase significantly compared to 2021, but there is no concern that it will lead to a decline in domestic market prices in terms of price or volume.
- The improvement in heavy plate demand continues: The three domestic heavy plate makers are predicting that the likelihood of a decline in domestic heavy plates demand over the next two to three years seems extremely low. This is because the order receipts of domestic shipbuilders have increased and the demand for replacement of eco-friendly ships is highly likely to increase again in 4-5 years.
Particularly, the restructuring of Japanese heavy plates makers, China’s production cuts and preferential supply policies in the country will act in a complex way wherein domestic shipbuilder’s competitiveness in winning orders for high-value added ships is still high.
In addition, the construction investment is expected to increase by around 2.5 % in 2022 compared to the previous year, and demand for new and renewable energy such as the Korean New Deal and global offshore wind power is highly likely to expand in line with carbon neutrality.
~Inputs from SteelDaily
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