Nippon Steel Seeks 5-10% Hike for Shipbuilding Plate

Nippon Steel apparently started negotiation for shipbuilding plate contract price with domestic shipbuilders including Mitsubishi Heavy Industries and Mitsui Engineering & Shipbuilding. Nippon Steel seeks 5-10% of hike for October shipment to cover higher cost for freight, ferrous scrap and energy. The firm tries to increase the relative cheaper domestic price than international level. The firm also seeks higher extra charge for shot primer process and high tensile steel.

Nippon Steel entered into the negotiation for 5 years in a row. Domestic steel makers agreed for lower level of hike with conditioning for timing when the shipbuilders operated at low profit level of order price. The steels sought 10% hike for October 2006 and finally reduced the hike to 5% hike and delayed the start to January 2007. However, the shipbuilders enjoy higher priced order improving the profitability.

Shipbuilders in South Korea and China increase the plate order to Japanese steels and are expected to increase more.

Japanese shipbuilding demand increases by 3.9% to 4.175 million tonnes in fiscal 2007 ending March 2008 from previous year, according to member hearing by Shipbuilding Association of Japan. The builders keep more than 4 years of order backlog and the plate demand is expected to keep high level. Nippon Steel tries to keep stable supply of the plate through the hike. The firm will seek price hike for plate in other applications under tight supply.