Shipbuilding plate may sink in Chinese markets

Shipbuilding plate may sink in Chinese markets

China’s shipbuilding plate market may see significant decreases in the upcoming months due to the sluggish freight market in the first half and expected production increases in the second half. Currently, Japanese shipbuilding plate is offered at around $720/ton FOB China. Such a price should be regarded as a support for the market since the domestic price of shipbuilding plate in Japan is around $550/ton. According to the latest news, South Korea’s Dongkuk Steel decreased its shipbuilding plate price by $29/ton, while Japan’s Sumitomo increased its prices by $45.5/ton yesterday. The moves by both companies should bring global plate prices closer to convergence as Dongkuk’s shipbuilding plate price fell to $632/ton while Sumitomo’s price climbed to $547/ton. Influenced by the drop off in international freight during the first half of this year, the prices of newly built ships experienced a notable adjustment in June. On June 10, Clarksons Research Studies indicated a trading price reduction for newly built ships after 33 consecutive months of price increases. Buyers have adopted a “wait-and-see” attitude towards the shipbuilding market. Meanwhile major global shipbuilding companies AP Moller-Maersk and Royal P&O Nedlloyd N.V obtained approval in August to merge. Furthermore, German shipping company TUI is carrying out transactions to buy Canadian CP Ships Limited. Experts predict that there will be some adjustments in the international shipbuilding market, that the trade volume will decrease somewhat yet the ship capacity in the market will increase. Therefore, we will face either idle capacity or low freight rates, either of which will discourage more shipbuilding. Therefore, shipbuilding prices will be in a downward trend. Although shipbuilding plates require higher quality and have more technical barriers than medium plate, China’s domestic steelmakers are trying their best to overcome such difficulties in order to produce more shipbuilding plate because of the greater profit margin. Therefore, some steelmakers will start to abandon medium plate and focus instead on shipbuilding plate production. This will in turn cause an increase in shipbuilding plate supply and soften the prices. China produced 2.82 million tons of shipbuilding plate in the first seven months of this year, up 51 percent year on year. Current 8 mm shipbuilding plate prices in Shanghai are around RMB 4’280–4’330/ton. Xinyu Steel-origin products saw a decline of RMB 70/ton over the past week, while Shanghai No. 3 products fell around RMB 20/ton. 8 mm shipbuilding plate prices in Guangzhou are around RMB 4’750/ton. For reference, the prices at the beginning of April for 8 mm shipbuilding plate were around RMB 6’250/ton ($755/ton) in Guangzhou and RMB 6’070/ton ($733/ton) in Shanghai.