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Posco’s new CEO cozies up to two shipbuilders

Published: 04 Apr. 2014, 20:36

Kwon Oh-joon

New Posco Chairman Kwon Oh-joon is moving to build better relationships with its customers as Korea’s largest steelmaker aims to improve its profitability.

Kwon, who officially became head of the steel conglomerate last month, yesterday visited Korea’s two largest shipbuilders, Hyundai Heavy Industries in Ulsan and Samsung Heavy Industries in Geoje, South Gyeongsang, and discussed strategies for joint growth with their CEOs.

“To overcome difficulties in shipbuilding and the steel industry that were caused by a sluggish global economy and become global leaders, we need to reinforce mutual trust and cooperative relationships,” Kwon said.

Posco said that the purpose of Kwon’s visit was also to promote the company’s “solution marketing,” which focuses on not only providing products that customers want but also offering technology support and starting projects together.

Industry analysts said the emphasis wasn’t surprising because Kwon was Posco’s chief technology officer before becoming chairman.

“We will provide and develop steel products that are used in future value-creating businesses like offshore plants and environmentally-friendly ships,” the company said in a release. “We will also boost strategic partnerships with customers.”

Posco said shipbuilders are particularly important customers as they purchase the largest amount of thick steel plates.

According to data from Clarkson Research, a London-based global shipbuilding information provider, Korean shipbuilders won orders for a total of 4.03 million compensated gross tonnage (CGT) in the first quarter, up 19.2 percent from a year earlier. CGT is a unit of measurement of shipbuilding output calculated by applying a conversion factor that reflects the amount of work required to build a ship in relation to a vessel’s gross registered tonnage.

Although the orders are behind shipbuilders in China, which bagged orders of 4.29 million CGT, Korea was still ahead in terms of order value. Its orders were worth $9.3 billion, $1.6 billion more than China’s.

Korean steel companies and shipbuilders haven’t finalized the price of thick plates for the second quarter. The two sides negotiate prices every quarter, but agreement has been delayed for three months because shipbuilders want a discount while steelmakers want a price increase.

Industry insiders suspect Kwon’s visit to Korea’s two largest shipbuilders yesterday will speed up the negotiations.

BY joo kyung-don [[email protected]]