S. Korean steelmakers POSCO, Hyundai negotiating higher prices with local shipbuilders

South Korean steelmakers POSCO and Hyundai Steel Co.are in the final stage of negotiations with shipbuilders over higher prices of thick steel plates.

POSCO, South Korea’s largest steelmaker, has reportedly proposed a price hike in thick steel plates from around 700,000 won per ton in the first half of the year to 1.15 million won per ton.

Thick steel plates are a key material that accounts for about one-fifth of shipbuilding costs.

Steelmakers make separate deals with shipbuilders over thick steel plate prices every half-year.

POSCO's targeted price hike was due to the increased costs of iron ore, which hit a record high of $237.57 per ton by CFR China on May 12, hiking sharply from $91.67 in the same period last year.

Kim Hyun-tae, an analyst at BNK Securities, said the interests of steelmakers and shipbuilders do not run contrary to each other.

Korea Shipbuilding & Offshore Engineering Co. (KSOE) won new orders for 156 ships and two offshore plants worth a combined US$13.8 billion, accomplishing about 92 percent of its annual target of $14.9 billion.

KSOE and POSCO could strike a deal of between 1 million won and 1.15 million won per ton of thick steel plates.

Daewoo Shipbuilding & Marine Engineering Co. and Samsung Heavy Industries Co., which achieved over 60 percent of their annual order target in the first half of the year, are in the final stage of negotiations with POSCO and Hyundai Steel Co.