JFE Steel Increases Steel Plate Price for South Korean Shipbuilders

JFE Steel agreed with South Korean shipbuilders such as Hyundai Heavy Industries to increase the steel plate price by about US$ 20 per tonne to around FOB US$ 650 with for shipment from October 2007 to March 2008. South Korean shipbuilders had disapproved the hike due to increasing material costs. However, they adopted the hike finally for the stable supply when steel plate supply maintains rather tight thanks to strong demand for marine transport and resources development. JFE Steel’s steel plate export volume is expected to be the same level as the previous half year to South Korean shipbuilders.JFE Steel initially requested the hike by US$ 40-50 per tonne against South Korean shipbuilders when the firm didn’t have spare output capacity with strong domestic demand and Japanese shipbuilders’ active production at overseas plants. South Korean shipbuilders showed disapprovals to the hike because their profitability would become worse with increasing material costs. In addition, the shipbuilders had already contracted the steel plate purchasing price with other Japanese integrated steel makers including Nippon Steel, Sumitomo Metal Industries and Kobe Steel this spring on one-year contracts.South Korean shipbuilders have order backlogs for over next 4 years. They forecast the steel demand for shipbuilding would increase by 2 million tonnes to 7.52 million tonnes in 2007 from 2006. South Korean plate makers already announced the expansion of their capacity. But their expansion would come into effect after 2009. Tightness of steel plate supply is expected to continue. JFE Steel will continue the price hike step by step.