Steel Costs News

U.S. government moves to negotiate steel import quotas with its allies in exchange for tariff exemptions could leave them worse off than countries who have to pay the levy.Washington set tariffs of 25 percent on U.S. steel imports in March, but has since granted the European Union, Canada and Mexico temporary exemptions until June 1.It has also agreed permanent exemptions for Brazil, Australia, Argentina and South Korea in return for quotas.South Korea, for example, agreed to quotas restricting its steel sales to the United States by 30 percent…

Huntington Ingalls Industries, the largest shipbuilder for the U.S. government, said new tariffs on steel and aluminum should not impact the price of its own shipbuilding in the near-term, but does not know if tariffs will raise prices for its suppliers. Huntington's Newport News Shipbuilding yard in Virginia has a multi-year financial agreement that guarantees steady pricing for its steel, known as a hedge, Jennifer Boykin, president of Newport News Shipbuilding in Newport News, Virginia, told reporters on Tuesday at the Sea Air Space Exposition in National Harbor, Maryland.

·        Higher steel costs weigh on margins ·        Outlook weakens but top players set to weather downturn Hyundai Heavy Industries Co Ltd 009540.KS reported on Oct 30 that its quarterly net profit fell by a third, hit by rising raw materials costs and losses from the weaker won. The shipbuilding industry faces declining orders and falling shipping demand amid a deepening global downturn. Margins are set to fall with new ship prices turning lower and raw material prices rising. (Source: Reuters)

Mitsui Engineering & Shipbuilding Co., 's second-largest shipbuilder by sales, forecast profit will rise 64 percent in three years, aided by record demand. The shares gained the most in two weeks, Bloomberg reported. Operating profit may reach $534min the year through March 2011, from 33 billion yen estimated for the year just ended, the Tokyo-based company said today in a statement. Sales are forecast to rise 27 percent to 800 billion yen in three years. No net income targets were given. Mitsui Engineering, with a three-year order backlog, said today it will accelerate spending to expand production capacity. The company is counting on rising sales of its vessels to counter higher steel costs and a stronger yen that would erode the value of overseas earnings.

Dry bulk rates may have eased back significantly in recent weeks but there is still plenty of positive sentiment on the future market. Many shipbrokers are describing today’s rather softer market as a correction to what had become a seriously overheated sector, with the cost of freight becoming itself a damaging factor in the world’s dry bulk trades. The pause in the market has led to a slackening in the pace of new contracting that, brokers say, may be no bad thing. Some owners had become so concerned by rapidly rising new ship prices that they were rushing in, whatever the price. That trend, at least for the moment, appears to have eased as owners have come to the conclusion that the wild rates of February and March were quite exceptional…

Bloomberg reported that Hyundai Heavy Industries Co. and other shipbuilding companies may succeed in keeping vessel prices at record highs for a third year as they seek to shield earnings against dropping orders and higher steel costs. The top-three yards, Hyundai Heavy, Daewoo Shipbuilding & Marine Engineering Co. and Samsung Heavy Industries Co., all from South Korea, will book new orders around today's all-time highs, according to four out of five analysts surveyed by Bloomberg. The companies will give their outlooks for 2007 as early as this week. South Korea's yards took almost half of this year's orders in the world's $100 billion ship industry, as transporters turned to them for the largest and most expensive vessels.

Hyundai Heavy Industries Co. last week posted a more-than-fivefold increase in second-quarter net profit amid higher ship prices and lower steel costs. Hyundai Heavy reported net profit of $200m in the three months ended June 30. Hyundai Heavy received $5.01 billion worth of new shipbuilding and offshore structure orders in the January-June period. Its backlog orders totaled 236 vessels valued at $19.8 billion at the end of June, which will occupy its dockyards for next three years, the Houston Chronicle reported. (Source: Houston Chronicle)

Bloomberg has reported that Daewoo Shipbuilding & Marine Engineering Co., said it has received a $531m order to build container ships for a customer in Panama. The Seoul-based company will build an unspecified number of container ships and deliver them by April 30, 2010, Daewoo said in a regulatory filing to the Korea Exchange today, without revealing the identity of the customer. Daewoo and South Korea's six other shipbuilders, which built 38 percent of vessels delivered globally in 2005, said this month they may raise prices of ships to take advantage of record orders and protect their profits from increasing steel costs. Daewoo Shipbuilding earned a net income of 19.9 billion won in May, compared with a loss of 19.9 billion won in the same month last year, the company said.

South Korea's seven shipbuilders, which delivered 38 percent of the world's vessels in 2005, said they may raise the prices of new ships by about five percent to take advantage of record orders and protect their profits from rising costs, according to a report from Bloomberg. Higher prices protect shipbuilders' earnings from the Korean won's gains against the U.S. dollar and shield them from steel costs that have risen 70 percent since 2003. A third year of rising ship prices add to the costs of Taiwan's Evergreen Marine Corp. and other shipping lines which carry an estimated 90 percent of global trade. The price of a supertanker that can hold 2 million barrels of oil rose 4 percent to about $125 million in December, the Korea Shipbuilders Association said, citing Clarkson Plc.

Bloomberg has reported that South Korea's seven shipbuilders, which delivered 38 percent of the world's vessels in 2005, said they may raise the prices of new ships to take advantage of record orders and protect their profits from rising costs. Carriers of containers, oil and minerals may cost about 5 percent more this year, said Hyundai Samho Heavy Industries company officials. Higher prices protect shipbuilders' earnings from the Korean won's gains against the U.S. dollar and shield them from steel costs that have risen 70 percent since 2003. A third year of rising ship prices add to the costs of Taiwan's Evergreen Marine Corp. and other shipping lines which carry an estimated 90 percent of global trade.