South Korea’s ship and steel makers are wrangling over the planned hike in vessel steel plates as shipbuilders still reeling from a lengthy global slump worry higher production cost would further weaken their competitiveness against Chinese rivals.

According to sources from shipbuilding and steel industries on Friday, three shipbuilding majors Hyundai Heavy Industries (HHI), Daewoo Shipbuilding & Marine Engineering (DSME) and Samsung Heavy Industries are engaged in negotiations with mainstream steel mills Posco, Hyundai Steel and Dongkuk Steel Mill that claim they cannot afford the current supply prices for shipbuilding plates that have been frozen for years due to global glut.

“We no longer can take consideration of domestic shipbuilders’ conditions because the losses in the plate business have cut into the bottom line of steelmakers,” said a company official from a steelmaker.

Posco, the biggest supplier of vessel plates, said during a recent conference call that it will be able to reach break-even point in plate sector in the second half if it can raise the supply prices to domestic shipyards.

Shipbuilders are pleading for grace. The chairman of Korea Offshore & Shipbuilding Association (KOSHIPA) called the steel industry to reconsider the price hike plan as it could further aggravate productivity of shipbuilders.

Korean shipbuilders have fallen behind Chinese rivals in recent years as they lose price competitiveness.

The industry closely watching the results of talks between industry leaders HHI and Posco as their decision will likely affect the price policy of others.

By Moon Ji-woong

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]