Japan Steels to Hike Plate by US$ 20/t for Korean Shipbuilders

Japanese integrated steel makers reached basic agreement with South Korean shipbuilders by Friday to increase the plate export price by $20 to FOB US$ 630 per tonne for fiscal 2007 shipment starting April compared with the price for October-March. They apparently changed the term from traditional half year to full year to stabilize the price when the market condition is uncertain for the second half of fiscal 2007. Japanese major steels expect the price hike impacts positively on the price negotiation with Japanese shipbuilders for the coming year. Japanese steels sought US$ 40 per tonne of hike for the shipbuilding plate export to South Korea under the tight supply. The shipbuilders asked around US$ 15 of price down under higher cost for materials. The parties had hard negotiation for October-March shipment resulting in a month delivery stop by Japanese steel makers. However, they share the market view in the current negotiation when South Korean shipbuilders will keep high level activity in fiscal 2007 to meet growing seaborne transport. They compromised for the small price hike to keep long term relationship under tight plate supply and higher Asian market price. Korean shipbuilders asked the yearly contract for stable supply and Japanese steels accepted the term change from traditional half year contract. The talk finished in around a month of negotiation much shorter than previous talk. The shipbuilding plate hike could impact on the other items when Japanese integrated steel makers try to increase the export price for hot rolled coil, coated steel and tinplate. Japanese steels could gain from the higher export prices.