Korea Cast Iron Pipe Industry Signs Large Cast Steel Product Contract with Samsung Heavy Industries... Order Backlog Up 30%

Korea Cast Iron Pipe Industry Co., Ltd. (025890) has signed a contract worth 2.6 billion won with Samsung Heavy Industries to supply large cast steel products for ships, accelerating its expansion of orders amid a booming shipbuilding industry. With only a limited number of domestic companies able to produce large cast steel products weighing over 50 tons, the company is also negotiating price increases with major clients, raising expectations for improved profitability.

On August 11, Korea Cast Iron Pipe Industry Co., Ltd. announced that it had signed a contract worth 2.6 billion won with Samsung Heavy Industries to supply large cast steel products for ship hull structures. The supply volume corresponds to about 12 vessels.

This contract is an individual agreement under the total supply agreement for large cast steel ship components worth 11.7 billion won signed with Samsung Heavy Industries in December of last year. The original contract covered 47 vessels, including LNG carriers and container ships. Individual supply contracts are being signed sequentially, based on the confirmed order volumes.

Korea Cast Iron Pipe Industry Co., Ltd. previously signed an individual contract worth 3.7 billion won in December last year and added another contract worth 3.1 billion won in April of this year. With the latest 2.6 billion won contract, the total amount of individual contracts to date is about 9.4 billion won. The remaining undelivered volume in the supply contract will also proceed as separate agreements going forward.

Cast steel products for shipbuilding are essential for constructing ships but are a downstream industry, meaning orders are placed after a significant time lag from when shipbuilders secure vessel contracts. Typically, orders for cast steel products follow roughly two years after shipbuilders receive vessel orders.

Consequently, the large orders secured by domestic shipbuilders in 2023 and 2024 have begun translating into cast steel product orders starting this year. Korea Cast Iron Pipe Industry Co., Ltd.'s order backlog also reflects this trend. The order backlog, which stood at 6,441 tons at the end of last year, rose to 8,400 tons as of the end of June this year, marking an increase of about 30%.

The limited number of manufacturers is also cited as a factor strengthening Korea Cast Iron Pipe Industry Co., Ltd.'s bargaining power, as few domestic companies can produce large cast steel products weighing more than 50 tons.

In fact, in July, Korea Cast Iron Pipe Industry Co., Ltd. finalized price increase negotiations with one of its major customers. As order volume and product prices improve, the company is increasingly likely to see a positive impact on its future performance and profitability.

Korea Cast Iron Pipe Industry Co., Ltd. is expanding beyond its business structure concentrated in the shipbuilding industry, branching out to power generation, defense, and offshore plant sectors. Since its establishment in 1987, the company has specialized in the production of large cast steel products for nearly 40 years and holds nine global classification certifications, including the Korean Register of Shipping (KR).

In the power generation sector, the company is expanding its cast steel business for gas turbines. It completed initial production of cast steel products for gas turbines in May and has since been making additional deliveries. Preparations for entering the offshore plant market are also underway. The company is working on obtaining NORSOK certification, the standard in the offshore plant sector, within the year.

A representative of Korea Cast Iron Pipe Industry Co., Ltd. stated, "Individual contracts are being signed sequentially in line with the supply agreement concluded last year," adding, "While ensuring timely delivery of secured volumes, we will broaden our portfolio to include high value-added specialty steel products and enhance profitability together."

The management is also continuing responsible management efforts. CEO Ha Man-kyu has been purchasing company shares in line with the previously announced plan to acquire shares worth 500 million won disclosed on July 2.

The company explained, "At a time when the business structure transformation is accelerating, the management is increasing its direct stake to demonstrate its commitment to responsible management and to convey confidence in mid- to long-term growth to the market."

Korea Cast Iron Pipe Industry Co., Ltd. is securing additional contracts with Samsung Heavy Industries and increasing its order backlog while higher prices and expansion into power generation, defense, and offshore plant sectors are broadening its growth foundation as orders placed by shipbuilders are converted into contracts for large cast steel products.

This content was produced with the assistance of AI translation services.