Korea’s Big 3 Shipbuilders on Track for Meeting Annual Order Goals

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Korea’s three major shipbuilders are likely to attain their new order targets for this year. Currently, they have achieved 60% to 70% of their annual goals. They believe they will have no problems in meeting their goals as new orders tend to be concentrated in the second half and at the end of the year.

According to the shipbuilding industry on October 8, the Hyundai Heavy Industries Group posted US$10.4 billion in order receipts as of the end of September, attaining 79% of this year’s target of US$14.8 billion. The company landed 129 new orders in total, ranking first among the top three Korean shipbuilders. But the company failed to record US$1.6 billion in new orders for offshore plants. By vessel type, the group booked orders for 31 high value-added gas vessels including 16 LNG carriers, 12 LPG tankers and three ethane carriers, 47 container ships, and 47 tankers. This is the largest order volume in five years since it hit 200 vessels or US$13.9 billion in 2013.

Daewoo Shipbuilding & Marine Engineering (DSME) also surpassed half of its target for this year. The shipbuilder received a total of 35 orders worth US$4.6 billion, or 63 percent of its US$7.3 billion target for this year. Although DSME won no offshore plant order, it landed orders for 12 LNG carriers, 15 large-scale crude oil tankers, seven super large containerships, and one special ship.

Samsung Heavy Industries won orders for a total of 40 ships valued at US$4.7 billion so far this year, reaching 57% of its 2018 target. The shipbuilder received orders for a total of 40 ships, including a 174,000 cubic meter LNG carrier for about 200 billion won (US$176 million) from an Asian shipping company. The 40 ships include 10 LNG carriers, 13 container ships, 14 tankers and three special ships.

Shipbuilding analysts say that Korean shipbuilders’ order receipts have recovered compared to last year. However, the three shipbuilders performed poorly in the third quarter of this year. Hyundai Heavy Industries and Samsung Heavy Industries are expected to continue to post losses, while DSME is expected to remain profitable, although the size of the profits is expected to dwindle.

Although order taking is showing a sign of recovery, the shipbuilders are feeling pressure as ship prices have not risen sharply and steelmakers have raised prices of steel plates for shipbuilders by more than 50,000 won per ton in the second half of this year. Steel plates account for 15% to 20% of shipbuilding costs.

Source: BusinessKorea



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