JFE Holdings Inc.’s shipbuilding unit, Japan’s second-largest by output, is aiming to win orders for as many as five vessels, mostly to be used to carry iron ore, by October amid rising seaborne trade of the steelmaking material. “We’re in discussions with longstanding major customers,” Shinjiro Mishima, chief executive officer of the Tokyo-based company’s unit Universal Shipbuilding, said yesterday in an interview, without identifying the companies. “We’re chasing contracts in the category of large dry-bulk ships and oil tankers.”
Iron-ore carriers including Nippon Yusen K.K. and Mitsui O.S.K. Lines Ltd. are expanding their dry-bulk fleets to tap demand for the steelmaking material. Exports of the ore from Australia, the world’s largest shipper, are forecast to rise at an average annual rate of 7 percent to 2015, the Australian Bureau of Agricultural and Resource Economics said March 2.
“Our target is to get orders for around five vessels in the half-year period” to Sept. 30, Mishima said, adding he’s not sure if the company will win contracts for all of them. “It’s likely to lead to orders for some ships in the first half.”
The company won contracts to build three cape-size bulkers last Japanese fiscal year after the financial crisis dried up global orders for new ships, Mishima said. Orders received by Japanese shipyards tumbled 57 percent for the year ended March 31, according to data from the Japan Ship Exporters’ Association.
JFE Holdings shares fell 0.8 percent to 2,712 yen at the 11 a.m. trading break on the Tokyo Stock Exchange. Universal Shipbuilding, 85 percent owned by Tokyo-based JFE, was formed in 2002 when NKK Corp., now part of JFE, and Hitachi Zosen Corp. merged shipbuilding operations.
Rising Costs
To be sure, rising steel prices may lead to higher vessel prices, reducing shipping lines’ appetite to buy new ones, as Asian shipyards are set to deliver vessels of orders they received before the financial crisis, Mishima, 60, said. Steel accounts for 30 percent of the costs to build a vessel, he said.
Japanese steelmakers and domestic shipbuilders are in the final stage of talks to raise plate prices by 20,000 yen ($228) a metric ton for the April-September period, the Japan Metal Daily said June 22, without giving the price levels, and not saying where it got the information.
Universal Shipbuilding is still in negotiation with domestic mills, including JFE’s steel unit, to agree on plate prices for the six months through Sept. 30, Mishima said.
While Universal is ready to pay higher prices for plates, the size of a price increase should be less than 20,000 yen a ton, he said.
Price Increase
“We’ll have to accept a certain level of price increase as iron ore and coal prices go up,” Mishima said at the company’s headquarters in Kawasaki, near Tokyo. “Our concern is we’re unable to pass on increased steel costs to buyers.”
JFE Steel expects to be able to cover most of rising material costs by raising steel prices, President Eiji Hayashida said June 22 at a conference of the Japan Iron and Steel Federation, which he chairs.
Universal Shipbuilding isn’t considering buying lower- priced steel from South Korean and Chinese mills as it intends to sustain historic ties with domestic steelmakers, Mishima said.
The shipbuilder wants to cut total costs by 10 percent at all of its five yards by cutting use of steel and other materials and improving production efficiency for the year through March 31, 2011, Mishima said.
Iron-ore carriers including Nippon Yusen K.K. and Mitsui O.S.K. Lines Ltd. are expanding their dry-bulk fleets to tap demand for the steelmaking material. Exports of the ore from Australia, the world’s largest shipper, are forecast to rise at an average annual rate of 7 percent to 2015, the Australian Bureau of Agricultural and Resource Economics said March 2.
“Our target is to get orders for around five vessels in the half-year period” to Sept. 30, Mishima said, adding he’s not sure if the company will win contracts for all of them. “It’s likely to lead to orders for some ships in the first half.”
The company won contracts to build three cape-size bulkers last Japanese fiscal year after the financial crisis dried up global orders for new ships, Mishima said. Orders received by Japanese shipyards tumbled 57 percent for the year ended March 31, according to data from the Japan Ship Exporters’ Association.
JFE Holdings shares fell 0.8 percent to 2,712 yen at the 11 a.m. trading break on the Tokyo Stock Exchange. Universal Shipbuilding, 85 percent owned by Tokyo-based JFE, was formed in 2002 when NKK Corp., now part of JFE, and Hitachi Zosen Corp. merged shipbuilding operations.
Rising Costs
To be sure, rising steel prices may lead to higher vessel prices, reducing shipping lines’ appetite to buy new ones, as Asian shipyards are set to deliver vessels of orders they received before the financial crisis, Mishima, 60, said. Steel accounts for 30 percent of the costs to build a vessel, he said.
Japanese steelmakers and domestic shipbuilders are in the final stage of talks to raise plate prices by 20,000 yen ($228) a metric ton for the April-September period, the Japan Metal Daily said June 22, without giving the price levels, and not saying where it got the information.
Universal Shipbuilding is still in negotiation with domestic mills, including JFE’s steel unit, to agree on plate prices for the six months through Sept. 30, Mishima said.
While Universal is ready to pay higher prices for plates, the size of a price increase should be less than 20,000 yen a ton, he said.
Price Increase
“We’ll have to accept a certain level of price increase as iron ore and coal prices go up,” Mishima said at the company’s headquarters in Kawasaki, near Tokyo. “Our concern is we’re unable to pass on increased steel costs to buyers.”
JFE Steel expects to be able to cover most of rising material costs by raising steel prices, President Eiji Hayashida said June 22 at a conference of the Japan Iron and Steel Federation, which he chairs.
Universal Shipbuilding isn’t considering buying lower- priced steel from South Korean and Chinese mills as it intends to sustain historic ties with domestic steelmakers, Mishima said.
The shipbuilder wants to cut total costs by 10 percent at all of its five yards by cutting use of steel and other materials and improving production efficiency for the year through March 31, 2011, Mishima said.