S. Korea: Shipbuilders continue to face drawn-out slump in January

S. Korea Shipyard

South Korean shipbuilders, led by Hyundai Heavy Industries Co., secured only three shipbuilding deals in January, valued at a combined 2 trillion won (US$1.72 billion), heralding another tough year lying ahead for them, industry sources said Wednesday.

According to the sources, Samsung Heavy Industries Co. clinched two deals last month, valued at 1.77 trillion won, to build an offshore facility and a floating storage and regasification ship.

Hyundai Heavy bagged a some 200 billion-won deal to build two oil tankers, with Daewoo Shipbuilding & Marine Engineering Co. failing to secure any such deal last month, they said.

In January last year, the big three shipyards clinched no shipbuilding deals as well, while they secured a combined 2.09 trillion won worth of deals in January 2015.

The thorny issue is that they may face a protracted slump in securing new deals down the road

For the year, 20.5 million compensated gross tons (CGTs) worth of new ships are expected to be placed, up 84 percent from last year’s 11.17 million CGTs, but the estimate is far below the four-year average of 42 million CGTs, according to industry tracker Clarkson Research Services.

The shipbuilding industry, once regarded as the backbone of the country’s economic growth and job creation, has been reeling from mounting losses caused by an industrywide slump and increased costs.

The country’s top three shipyards suffered a combined operating loss of 8.5 trillion won in 2015 due largely to increased costs stemming from a delay in the construction of offshore facilities and the industrywide slump, with Daewoo Shipbuilding alone posting a 5.5 trillion-won loss.

The shipbuilders have drawn up sweeping self-rescue programs worth some 11 trillion won in a desperate bid to overcome a protracted slump and mounting losses.

Last year, Hyundai Heavy is forecast to have swung to the black, while the two other shipyards are estimated to have suffered losses, according to industry sources.

Source: Yonhap

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