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Chinese shipbuilders more vulnerable to steel price hike than Koreans: Clarkson

Hong Kong: Rising global steel prices will affect Korean shipbuilders, but Chinese shipbuilders which are in hot pursuit of their Korean counterparts in the world market are likely to be hit more heavily by the rising steel costs, U.K.-based shipbuilding and shipping market research firm Clarkson said. Clarkson has analyzed in its weekly report released Tuesday the impact on shipbuilders of a run of steel price hikes recently made by major steelmakers including POSCO and Dongkuk Steel from Korea and Bao Steel from China.
Shipbuilders have been successful for the past few years in passing the cost burden to shippers at times of rising costs, but it will be interesting to see whether things would be the same this year, Clarkson said in the report. It added that "segmentation" is expected in the bulk carrier and container ship markets where demand responds sensitively to price movements.
As a matter of fact, the price of a supertanker has risen 3.9 percent over the past three months and that of a large bulk carrier by 0.5 percent, gradually raising the burden on shippers, according to Clarkson.
Both Korean and Chinese shipbuilders are exposed to risks from the steel price hike; however, Chinese shipmakers are likely to feel the immediate impact more acutely because the exchange rate acts as "cushion" in Korea which is not the case in China, Clarkson analyzed. It means that Korean shipbuilders can offset to some degree the rising cost burden by the weakening of the local currency while the Chinese companies will have to shoulder the burden intact. [2/7/08]


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