Hyundai Heavy to increase use of steel plate by 14pct in 2011

Thursday, 27 Jan 2011

Bloomberg reported that Hyundai Heavy Industries Co plans to increase use of steel plate by 14% in 2011 to the most since 2008 as it boosts production of container vessels and oil tankers.Mr Kim Ki Young, a spokesman of Hyundai Heavy Industries Co, said that it expects to use 4 million tonnes of plate in 2011 as compared with about 3.5 million tonnes in 2010. Consumption among the world's six largest yards, all based in South Korea, will rise 12% to 8 million tonnes, based on company figures.

Mr Cho In Karp head of research at Heungkuk Securities Co said that the increase in demand may help POSCO and Dongkuk Steel Mill Co, the biggest South Korean plate makers, raise prices that have tumbled 33% in two years amid a slowdown in ship deliveries and rising competition. Shipyards may be able to pass on higher costs as demand for vessels rebounds following the end of the global recession.He added that "It will give shipyards ammunition to raise ship prices, which will be positive in the long term. In the short term, higher plate costs could crimp margins."Shipyards spend the equivalent of about 15% of sales on steel plate, used to make hulls, making it their biggest materials expense. Prices have been unchanged at KRW 950,000 per tonne since the mills' last increase in July 2010.

Hyundai Steel Co, South Korea's second biggest steelmaker, began making plate in 2010 challenging POSCO, Dongkuk and Chinese and Japanese producers.Mr Moon Jeong Up, an analyst at Daishin Securities Co, said that "Demand is going to allow steelmakers to raise prices. Demand for steel plate is sure to increase because shipyards are planning to build more in 2011."According to Credit Suisse Group AG, prices for most types of steel are rising as increasing demand and flooding in Australia’s mining region pushes up materials costs. Coking coal may jump to a record USD 250 a tonne in 2011. Prices for iron ore arriving at Tianjin, China surged to a nine month high on January 21st 2011.

Samsung Heavy Industries Co, the world's second largest shipyard, plans to use 1.5 million tonnes of steel plate in 2011, a 15% increase. Third ranked Daewoo Shipbuilding & Marine Engineering Co expects use to climb 6.3% to about 1.7 million tonnes. STX Shipbuilding & Offshore Co, the No 4 yard, plans to use 810,000 tonnes, up by 5.9% YoY.Hyundai Heavy's steel plate tally includes units Hyundai Mipo Dockyard Co and Hyundai Samho Heavy Industries Co, the world's fifth and sixth biggest yards.
(Sourced from www.bloomberg.net)