Hyundai Heavy and other shipbuilders have been showing signs of a turnaround in recent months as they have won a series of orders, outpacing their Chinese rivals, according to industry analysts.
The analysts attribute the rebound to not only improving market conditions but also the shipbuilders’ concentration on high-value added vessels, such as liquefied natural gas (LNG) carriers.
Among others, the rising global oil price has increased the demand for offshore oil platform facilities, allowing shipbuilders to cast a rosy outlook on their business.
According to Hyundai Heavy Industries, Wednesday, it has signed a 513 billion won ($453.14 million) deal with LLOG Exploration, a Louisiana-based deepwater exploration firm, for building a floating production and storage facility.
It came as the company’s first offshore plant order in 47 months. Since winning a project from the United Arab Emirates in November 2014, the company has not won any offshore plant orders, rendering an idle workforce and building facilities.
The deal followed a series of recent news of domestic shipbuilders winning new orders.
Samsung Heavy Industries said last week that it has won a 200.1 billion won deal to build a 174,000 cubic-meter LNG carrier from a shipper based in Asia. Including the deal, Samsung Heavy has clinched orders for 40 vessels worth $4.7 billion. It is more than half the company’s yearly goal of $8.2 billion.
Daewoo Shipbuilding & Marine Engineering also won 35 ships worth $4.6 billion, reaching 63 percent of this year’s goal of $7.3 billion. Including orders won by its affiliates. Hyundai Heavy also reached approximately 70 percent of its yearly target of $14.8 billion, after winning 129 orders worth $10.4 billion.
Such a pace has helped the country maintain its No. 1 spot in the global shipbuilding market for five consecutive months.
According to Clarkson Research, Wednesday, Korean shipbuilders won 1.63 million compensated gross tonnage (CGT) for 28 vessels in September, accounting for 65 percent of the world’s total of 2.52 CGT for 75 vessels. Chinese companies accounted for 14 percent of total during the same period.
In terms of orders accumulated from January to September, Korea clinched 9.5 million CGT for 212 vessels, accounting for 45 percent of the global total. Chinese firms accounted for 31 percent with 6.51 million CGT, followed by Japan’s 12 percent with 2.43 million CGT.
“Amid International Maritime Organization regulations on cleaner ships, the demand for new vessels seems to be increasing and is concentrated toward domestic yards,” Hana Financial Investment analyst Park Moo-hyun said. “Such a trend will also raise the price of vessels.”
The Clarkson report said the Newbuilding Price Index rose by 1 point to stand at 130 in September.
“The turnaround is attributable to the growing demand for technologically challenging vessels, such as LNG Carriers and large containers,” a shipbuilding firm official said. “In the past, Chinese firms have taken away orders with their low-price strategy, but they seem to be faced with their technological limit.”
Source: KoreaTimes
