The U.S. government’s plan to impose sanctions on Chinese steel is creating challenges for South Korea’s shipbuilding industry. As South Korean shipbuilders eye potential contracts for constructing U.S. warships, they face a significant dilemma concerning their reliance on Chinese steel. To remain competitive, the industry has heavily imported inexpensive Chinese thick plates, which are steel sheets of at least 6mm thickness.
However, with the Trump administration’s efforts to sever ties with Chinese products, the feasibility of using Chinese steel in U.S. shipbuilding projects, including maintenance and repair work, appears increasingly uncertain. Recent reports indicate that the U.S. may ban Chinese steel and equipment on its vessels or impose regulations on ships utilizing these materials. Following President Trump’s commitment to rejuvenate the U.S. shipbuilding sector, various legislative efforts have emerged, aiming to enhance domestic shipbuilding capabilities while redirecting vessel construction to allied nations.
These initiatives seek to restore competitiveness against China’s dominant position in the shipbuilding arena. Thick steel plates constitute a significant portion of shipbuilding costs, accounting for 20-30% of total expenditures. Major players like HD Korea Shipbuilding & Offshore Engineering, Hanwha Ocean, and Samsung Heavy Industries rely on approximately 20% of their materials from Chinese suppliers, whereas smaller shipbuilders may depend on Chinese steel for around 50% of their needs.
The price of Chinese steel plates is typically 15-20% lower than that of domestic alternatives, which poses a financial burden if shipyards are compelled to transition to local steel. As the U.S. potentially tightens regulations on Chinese steel, South Korean shipbuilders aiming for U.S. contracts may have to lessen their dependence on these materials. The Korea Trade-Investment Promotion Agency has warned of the impact that such U.S. sanctions might pose on domestic shipbuilders.
Discussions at recent industry seminars have also explored the possibility of the U.S. restricting imports of Korean vessels that incorporate Chinese steel or imposing corresponding tariffs. An official from the shipbuilding sector commented that while typically the ordering shipowner dictates material origin specifications, any definitive decisions regarding the exclusion of Chinese products remain speculative at this early stage.