South Korea: Ship-building orders to keep heavy plates demand strong

Demand for heavy plates from the ship-building sector is likely to remain strong on the back of robust order books with domestic shipbuilders in November, says a SteelDaily report.

Korea's ship-building orders amounted to 770,000 compensated gross tonnage (CGT) in Nov'21, accounting for 58% of the global orders, as per media reports.

China accounted for 35% with 460,000 CGT, followed by Japan.

However, China took the first place with 21.92 million CGT (918 ships, 49%) out of the total 45.07 million CGT orders from Jan-Nov'21, followed by Korea with 16.96 million CGT (397 ships, 38%) and Japan with 3.93 million CGT (203 ships, 9%).

In terms of backlog, China accounted for 41% of the world with 37.2 million CGT, followed by Korea with 28.99 million CGT, 32%, and Japan with 9.29 million CGT, accounting for 10%.

The new building price index also rose 1.3 points from the previous month to 153.6 points in Nov'21, continuing an uptrend for 12 consecutive months.

By ship type, ultra large tankers recorded $190 million, container ships $187 million, and LNG carriers $205 million, showing an upward trend in most ship types. In particular, the price of LNG carriers increased by 10% compared to the same period last year.

As such, as orders continue to improve and ship prices rise, ship-building heavy plate makers are expected to move faster.

In a scenario where heavy plate offers from China have slowed down and ship-building prices are also rising, it will be tough to increase heavy plates supply, a source said, adding that the possibility of a significant decline during price negotiations seems low.

In terms of costs, prices of raw material prices such as iron ore and coking coal have fallen. The price of iron ore is at $100/t levels and coking coal at $300/t levels.

In the case of Japan, restructuring of heavy plates facilities is in progress, and in case of China, there is a high possibility that export capacity will be reduced due to its demand-priority policy and production cuts.

Where Korea is concerned, the impact of POSCO's Gwangyang no. 4 blast furnace maintenance is on track, and the demand for heavy plates for ship-building is expected to increase steadily. But supply conditions may not improve significantly.