Japanese Mills to Raise Their Prices of Shipbuilding Plates ?

Negotiations on the quality and price of shipbuilding plates for Korea have started. The Japanese mills move to raise their prices for shipment of January to March 2012 quarter. However, it was not in the situation for the Japanese mills to make their concrete offers until now. It is because the shipbuilders’ negotiations had never progressed with Japan, and had wasted time unnecessarily without POSCO’s price settlement with the major shipbuilders of Korea as well as negotiations for shipment of October though December.

Negotiations of this time are also similar to the past case but things are getting worse than those of the previous negotiations. It is said that one is that the shipbuilder side has requested price decrease of more than 100,000 won ($86) against POSCO, and is spreading to be already sure of the markdown of 50,000 won ($43). There is no information spread from the steel mill side for the time being.

Second is that the shipbuilder side of Korea is observing for the Japanese mills to move to decrease their prices in order to secure quantities, and expecting to purchase cheaper plates when POSCO’s reply is delayed.

Under such situation, the Japanese mills gave up to wait for a negotiation result between POSCO and the shipbuilder side, and are to have strengthened their stance to offer their prices in their own thinking. JFE Steel led to have made an offer of the markup of $30 to 50 from the current level against the major shipbuilders of Korea.

The plate mills of JFE are not in fuller production than before but are not dispensable with no increase of quantities for the Korean shipbuilders. It is because as next quarter falls in the delivery time of UO pipes for the projects like Ichthys and so on, it has to pass plates on to making UO pipes. Therefore, JFE is said to be no need to increase forcedly quantities for a shipbuilder. Prices of raw materials drop in next quarter but the mills’ costs of materials are not largely different from the current level in order to consume carried over materials at present. Under the situation, the Japanese mills will not be able to meet price decrease requested by the Korean shipbuilders.

Baoshan Iron and Steel of China maintained its domestic price of plates for January shipment on the current level. It could be considered to be a signal to confirm bottoming out of plate prices. It seems to have judged to be no more price decrease of plates. Despite that plate prices in Asia are sluggish, the situation is that prices seem to have reached a bottom, and will not be decreased further.

[mappress]

Shipbuilding Tribune Staff, December 28, 2011; Image: jfe-steel