| Announcements | ||
| Nippon Steel in advanced talks on Q4 heavy plate exports - 28 Aug, 2008 | ||
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Nippon Steel Corporation finds itself in advanced stages of negotiations on its heavy plate exports at a yen denominated price of JPY 150,000 per tonne FOB to shipbuilding companies and construction machinery manufacturers in South Korea and China for shipments in the October to December 2008 quarter. NSC claims to have concluded the negotiations with several customers by the first half of this week except Hyundai Heavy Industries Co. But NSC keeps mum about the names of those customers. Indications are that it will take NSC a fairly long time to settle its negotiations with HHI because the two sides are widely divided on price. NSC finds it difficult to make a concession to HHI alone since the Japanese steelmaker has already concluded several export contracts of heavy plates at a yen denominated price of JPY 150,000 per tonne FOB for October to December 2008 shipments. As a result, NSC indicates a position to wait until the time is ripe for a settlement with HHI. NSC's yen denominated offer of JPY 150,000 per tonne FOB this time is intended to get a price increase of JPY 35,000 per tonne on the price under contract with China's shipbuilding companies for July to September 2008 shipments and another price increase of JPY 55,000 per tonne on what is agreed with South Korea's shipbuilding companies for the corresponding shipments. It was forecast earlier that NSC would certainly face difficult negotiations with Chinese and Korean shipbuilding companies this time despite tight supply demand conditions for heavy plates in Asia and elsewhere. NSC, though, has succeeded in concluding its heavy plate export negotiations with several customers earlier than expected for October to December 2008 shipments thanks to a depreciating yen to the US dollar. A price of JPY 150,000 per tonne FOB translates into USD 1,360 per tonne FOB at an exchange rate of USD 1 for JPY 110. Until now, NSC's export prices of ship plates for South Korea have served as a benchmark of heavy plate transaction prices in Asia. Therefore, South Korea's shipbuilding companies are apprehensive that if they accept a price increase of JPY 55,000 per tonne for ship plate imports from NSC, it could bring a major price increase for ship plate imports from Chinese steelmakers, leading to domestic price increases of heavy plates by South Korea's integrated steelmaker Posco and electric steelmaker Dongkuk Steel Mill Co. South Korea's ship plate demand usually totals 9,000,000 tonnes per year. On the supply side, POSCO covers 35% of what is required, Dongkuk Steel 20%, Chinese products 25% and Japanese products 20%. POSCO's present domestic price of heavy plates is settled at KRW 920,000 per tonne, a price that translates into JPY 97,000 per tonne. Meanwhile, Dongkuk Steel's domestic price of heavy plates is linked to what the company pays for the procurement of slabs. In this connection, the world's slab export prices are forecast to come down for October to December 2008 shipments. As a result, there is speculation that Dongkuk Steel may keep its heavy plate price unchanged for Q4 shipments at home. | ||
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