A Fact of Life
According to industry sources, STX Offshore & Shipbuilding, which is currently in receivership, is planning to import thick plates from Chinese and Japanese steelmakers from next week. The company said that it signed thick plate supply contracts with them in late August and the first shipment is planned to arrive at its shipbuilding facilities in Jinhae in the middle of this month. It is said that the company paid cash for it after obtaining permission from a local court.
This supply is because STX Offshore & Shipbuilding failed to pay its tab to South Korean steelmakers in receivership and the latter refused to continue to supply thick plates. As of the end of last month, STX Offshore & Shipbuilding had 34 ships waiting to be built. South Korean steelmakers are planning to make no concession. “We will supply no thick plate at all unless the arrears are dealt with,” one of them mentioned.
Under the circumstances, controversies are lasting for months between local steelmakers and three major shipbuilders in South Korea surrounding an increase in thick plate price. The former are claiming that an upward adjustment is inevitable because the price of iron ore as a base material has gone up a lot. According to the Korea Resources Corporation, the price of iron ore increased from US$40.6 to US$57.45 per ton between the end of last year and September this year. The latter, in the meantime, are concerned about it with structural steel materials they purchase for shipbuilding, including thick plates, accounting for no less than 20% of their raw material expenditures.
With the situation as it is, the shipbuilders are turning their eyes toward thick plates imported from Japan and China. “It is true that South Korean steel products are more reliable in terms of quality and supply, but it is also true that an increasing number of steelmakers in South Korea are diversifying their steel product supply sources these days,” one of them explained.