Korean shipbuilders demand 20% price cut in steel plates from steelmakers

2022. 12. 6. 14:15
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Image of plate mill [Courtesy of POSCO]
South Korea’s shipbuilding are demanding steelmakers cut the price of steel plates as raw material costs have fallen this month.

Steel plates that are over 6mm in thick, which are used to the make hulls of ships, account for about 20 percent of shipbuilding costs.

The country’s three biggest shipbuilders helped POSCO restore its operations after its Pohang mill was hit by floods in September, but the once-warm atmosphere turned cold in price negotiations.

According to industry sources on Monday, iron ore prices averaged at $103.1 per ton this month, down 22 percent from the end of last year. The shipbuilding industry is requesting a 20 percent cut next year versus the first half of this year based on this drop.

The shipbuilding and steel industries negotiate the price of steel plates every six months and apply the agreed price retroactively on their financials. The shipbuilding industry argues that price adjustment is inevitable as steel plate prices increased in the last three half-year period since 2021.

In the first half of this year, steel plate prices doubled compared to the same period last year. However, the recent weak Korean won offset any impact from a decline in iron ore prices, sources said.

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