Japan Steels Offer FOB US$ 650/t for Shipbuilding Plate for South Korea

Japanese integrated steel makers started price negotiation for plate export with South Korean shipbuilders for April-September shipment. The steel makers offered FOB US$ 650 per tonne under tight supply, which is US$ 40 higher than the price in October-March. The shipbuilders resist the higher price when Chinese plate mills start the operation after late 2007. South Korean shipbuilders are expected to use annual 6 million tonnes of plate. They import around 1.5 million tonnes of plate from Japanese steels including Nippon Steel, JFE Steel and Sumitomo Metal Industries. The trade represents important part both for Japanese steels and South Korean shipbuilders.South Korean shipbuilders got 15.58 compensated gross ton of new order in January-September, according to Korea Shipbuilders’ Association. Under growing seaborne shipping, they have more than 3 years of order backlog. They are expected to use more plate with ongoing expansion. However, they resist the price hike by Japanese steels when they expect the tight plate supply will get easier toward late the year because Chinese new capacity will start operation. They claim the cost increase for nonferrous metals and other cost. Japanese steels operate plate mills at full capacity to meet high level demand by Japanese shipbuilders and construction activity. They also try to cover higher cost for raw materials including iron ore.