Export negotiation of plates for Korea for Q3 shipment to start soon

TEX reported that export negotiations on plates for shipbuilding for Korea has started for July to September 2011 quarter shipment since last month, but concrete negotiations are believed to start

in the end of this month. Therefore, offers will be made in the last week in July 2011.
Most Korean shipbuilders are said to have about 2 months' use of inventories. With this, each shipbuilder seems to defer new purchase giving priority to inventory clearance during July. To cooperate with this, the Japanese mills are watching such inventory clearance with no quickening negotiations.
Inventory clearance of the shipbuilders seems to make an effect to the Korean plate mills as well. It is because the shipbuilders also defer new purchase from the domestic mills. It is reported that the 3 plate mills of Korea remain to be in full operation. As of last year, plate production capacity of POSCO, Hyundai Steel, and Dongkuk Steel Mill was 7.0, 1.5, and 4.3 million tonnes a year respectively which were increased by 5 million tons a year from the previous year.
However, the shipbuilders seem to be unable to absorb such capacity increase for their own use due to inventory adjustment. With this, the plate mills like POSCO become very aggressive to export plates recently.
If the Japanese mills move to export of plates now, naturally, they will clash with the Korean mills. Under the situation, if the Japanese mills export plates to Korea, it will rub the Korean mills up the wrong way because the Korean mills are going to export excess capacity in domestic use.
And also, POSCO's actual prices remain unclear. Source says that POSCO has discounted by KRW 80,000 to KRW 100,000. However, the shipbuilders are far from satisfactory in that level, and are said to be urging POSCO to expand discount. The Japanese mills are thinking that they will be no need to hurry to offer till the actual prices in Korea are revealed.
Under the situation, export negotiations for this quarter shipment become diminished, and do not get underway. The Korean shipbuilders go on summer vacation from July 29th 2011. Therefore, the Japanese mills are considering making an offer before breaking off negotiations for about 10 days.
Source: TEX Report Limited