TEX reported that negotiations on steel plates for shipbuilding for Korea show a sign to go eventually into full swing for shipment of this quarter (January to March) 2012. Until now, the Japanese mills have kept watching POSCO's negotiations with the Korean shipbuilders like Hyundai Heavy Industries. As price negotiations between POSCO and the shipbuilders are expected to be certainly concluded as early as next week, the Japanese mills are to begin to move into full gear for negotiations.

As for plate prices for this quarter shipment for Korea, plural Chinese mills concluded contracts in November last year at price down of USD 40 to USD 60 as January 2012 shipment. Although there is some price difference between a first class and second class mills, contracts are said to have concluded almost at the level of USD 650 to USD 690 FOB. This becomes one of loadstars, and the Korean shipbuilders had requested that country's plate mills like POSCO to decrease their prices by KRW 100,000. While requesting large price down, the shipbuilders' side had showed their intention to purchase more quantity of the import plates cheaper than those of the domestic plates.

Although the Japanese mills are presenting some markup, they have kept watching the domestic price negotiations in Korea until now as they are concerned about an antidumping suit from the Korean mills if they set easily their prices. However, at this point, Hyundai Steel is said to have showed to accept price decrease of the level of nearly KRW 100,000 and therefore, the environment seems to become that POSCO is forced to compromise to accept price down to the nearly similar level to maintain its domestic market share.

Until now, POSCO was said to have shown an attitude to accept price down up to KRW 50,000 but POSCO is likely to be unable to have resisted the pressure. With this, there is a possibility for POSCO to settle its price negotiations as early as this week. At present, price of plates in Korea is about KRW 900,000 but it is possibly settled at the level of KRW 800,000.

For the Japanese mills, as such price level becomes a general indicator, attention is drawn to see whether the Japanese mills set their prices at this level or stay at higher prices than such level.

(Sourced from TEX Report Limited)