Sumitomo Metals Hikes Domestic Shipbuilding Plate by 3,000 yen/t

Sumitomo Metal Industries apparently agreed with domestic shipbuilders to increase the plate base price by 3,000 yen per tonne for October shipment. The firm keeps talking with the users to seek higher extra charge for shot primer and high tensile steel grades.The firm had price hike negotiation with shipbuilders for 5 years in a row since 2003. The firm tries to pass higher cost for freight and ferrous scrap and to improve the cheaper domestic price than international level. Japanese steel makers made consideration for the hike and the period when the shipbuilders had to build for cheap order backlog and posted lower profit and loss. Japanese steels compromised at around 5% hike for previous talk though they sought 10% hike originally. However, the shipbuilders improve the profitability due to higher order price. Chinese steel makers offer more than FOB US$ 700 per tonne for South Korean shipbuilders and Asian plate market price improves. Japanese shipbuilding plate demand will increase by 3.9% to 4.175 million tonnes in fiscal 2007 ending March 2008 from fiscal 2006, according to survey by Shipbuilders’ Association of Japan. The builders keep more than 4 years of order backlog and they are expected to keep getting strong order. Japanese plate supply is very tight due to higher demand for energy and building along with shipbuilding. The steel makers seek higher price to keep stable supply. Japanese shipbuilders resist the higher extra charge to avoid further cost push while the steel makers seek the higher charge to cover higher cost for raw materials.