S. Korean shipbuilders to resist price hike demands by local steelmakers

South Korean shipbuilders have reached a consensus not to agree to local steelmakers' demands to increase prices of thick steel plates, which account for about one-fifth of shipbuilding costs.

POSCO, the country's largest steelmaker, is pushing for a 15 percent increase for its thick steel plates.

An official of Hyundai Steel, South Korea's second-largest steelmaker, said they have also begun negotiations with shipbuilder Hyundai Heavy Industries Co. earlier this month and carmakers Hyundai Motor Co. and Kia Corp. He withheld further details.

But the shipbuilders are even insisting on a reduction in thick steel plate prices, or at least a freeze, to stay competitive amid the global economic slowdown.

Daewoo Shipbuilding & Marine Engineering Co. has started negotiating with POSCO and Hyundai Steel and will hold similar talks with Dongkuk Steel Mill Co., the third-biggest steelmaker.

Samsung Heavy Industries Co. has also launched negotiations with POSCO and Hyundai Steel.

The price increase is meant to reflect rising prices of iron ore, which jumped from $93.71 early last year to US$157.42 per ton on Jan. 28.
Ore is a key raw material for steel production.

Yi Hyun-soo, a Yuanta Securities Korea Co. analyst, said steel demand is expected to exceed supply.

Hyundai Steel shifted from a net profit of 25.6 billion won in 2019 to a net loss of 440.1 billion won in 2020, due to weak demand for steel induced by the pandemic. Its operating profit fell 78 percent from 331.3 billion won in 2019 to 73 billion won for the whole of 2020. Its annual sales plunged 12.1 percent to 18.02 trillion won.