Korean shipbuilders demand 20% reduction in steel plate prices from steelmakers

South Korea's shipbuilding industry is asking steelmakers to lower steel sheet prices as raw material prices declined this month.

Steel sheets over 6 mm thick, which are used to make ship hulls, account for about 20 percent of shipbuilding costs.

The country's three largest shipbuilders helped POSCO reopen after the Pohang plant was hit by floods in September, but the once-warm atmosphere in price talks has turned chilly.

Iron ore prices averaged $103.1 a tonne this month, down 22 percent from the end of last year, industry sources said on Monday. The shipbuilding industry is demanding a 20 percent cut next year compared to the first half of this year based on this drop.

The shipbuilding and steel industries negotiate a steel plate price every six months and apply the agreed price retroactively to their financials. The shipbuilding industry says a price adjustment is inevitable as steel plate prices have risen over the past three semesters since 2021.

In the first half of this year, steel sheet prices doubled compared to the same period last year. However, the recent weaker Korean won has offset any impact from lower iron ore prices, the sources said.