Bloomberg reported that South Korean shipyards plan to buy 12% less steel plate in 2012, worsening a demand slump that has hit prices at POSCO.
As per report, Hyundai Heavy Industries Co, Daewoo Shipbuilding & Marine Engineering Co and Samsung Heavy Industries Co will cut purchases to a combined 6.5 million tonnes from 7.4 million tonnes. The yards are the world's biggest buyer of steel plate, which is used for making hulls and in construction.
The shipbuilders, the world's three biggest, are making fewer oil tankers and container vessels as they focus on more lucrative drill ships and offshore units that generally need less steel. The shift may hurt earnings at POSCO, Dongkuk Steel Mill Co and Hyundai Steel Co, which have boosted plate making capacity 72% since 2008.
Mr Bang Minjin, an analyst at HI Investment & Securities Co, said that "Steelmakers are in for a tough year. Their one bright spot is about to fade."
Hyundai Heavy expects to cut the use of steel plate, its biggest raw material cost, by 14% to 3.6 million tonnes in 2012. The tally includes two affiliates.
The company's orders for oil tankers, container ships and dry bulk vessels halved to 23 last year because of competition from China and a global drop in orders caused by a capacity glut. The worldwide order backlog fell 26% in 2011, the biggest decline since Clarkson Plc began compiling data in 1995.
At the same time, Hyundai Heavy won a record 11 orders for drill ships last year as oil companies increase exploration. Such vessels, used for boring test wells, require about 20,000 tonnes of steel plate, half the amount needed for a 300,000 DWT oil tanker. New tankers have double hulls to help prevent leaks.
According to data from the Korea Iron & Steel Association, the three Korean steelmakers have boosted annual plate production capacity to 13.89 million tonnes from 8.09 million tonnes in 2008. They added facilities after five years of record orders caused steel plate prices to almost quadruple to as much as KRW 1.41 million per tonne in 2008.
(Sourced from www.bloomberg.net)
