HHI inks agreement for ex-China plate import increase

South Korea's largest shipbuilder Hyundai Heavy Industries Co Ltd (HHI) has signed a Memorandum of Understanding (MOU) with China's Jiangsu Shagang Group Co Ltd (Shagang) to import 180,000 tons of shipbuilding steel plates annually. Including this contract, imports from China are expected to account for 22 percent of HHI's total steel plate consumption (3.2 million tons) in 2007, which is being projected as 700,000 tons. HHI imported 500,000 tons of steel plate from China in 2006, and 200,000 tons in 2005. So far in 2006, HHI has procured 55 percent of its steel plate from South Korean mills such as POSCO and Dongkuk Steel, 30 percent from Japanese companies and 15 percent from China. In 2007, imports from China are expected to catch up with those from Japan. South Korean shipbuilders and Japanese mills have not yet been able to reach an agreement on the shipbuilding plate price for the fourth quarter of 2006 and the first quarter of 2007. Therefore, South Korean shipbuilders are planning to increase their purchases from China further. An HHI official stated “Supply of Chinese steel plates has increased 25 million tons since 2004. This is natural due to the lower price and rapidly improved quality.” On the other hand, the Jiangsu Shagang Group is close to completing its steel plate production facility, which will have a production capacity of over 2 million tons of 4,800 mm wide plate.