Two of South Korea’s three largest shipbuilders failed to clinch any new orders in the first quarter of the year, underscoring the protracted slump in the global shipbuilding segment, industry sources said Wednesday.
According to the sources, the country’s big three shipyards — Hyundai Heavy Industries Co., Daewoo Shipbuilding & Marine Engineering Co. and Samsung Heavy Industries Co. — received few orders during the January-March period. Only Hyundai Heavy clinched a 150 billion won (US$129 million) deal to build two petrochemicals-carrying ships this month.
Lower oil prices have been leading to a drop in demand for new ships or offshore facilities, and Chinese rivals have scooped up a large slice of orders for smaller ships, in particular.
Major South Korean shipbuilders have been pushing for restructuring since last year to get over the unfavorable business conditions caused by falling demand and ship prices in line with the slowing world economy.
In line with a protracted industrywide slump, the shipyards have trimmed their order targets for the year by 20 percent.
The three are expecting to win some $37 billion worth of new orders this year, compared with last year’s $47 billion, according to the sources.
Hyundai Heavy is targeting $16.7 billion worth of new orders this year, down 12.6 percent from last year’s $19.1 billion.
Daewoo Shipbuilding is aiming to win some $10 billion worth of new orders, compared with last year’s $13 billion. Samsung Heavy also cut its order target to $10 billion from last year’s $15 billion, the sources said.
Hit by a protracted slump in oil prices and increased costs, the three racked up a combined loss of 7.7 trillion won ($6.41 billion) last year, marking the first time for all three of the nation’s largest industry players to register losses.
Market watchers expect their business slump to continue this year as the global shipbuilding industry is unlikely to turn around any time soon.
The stuttering shipbuilding sector is feared to be a major drag on South Korea since it is one of the key growth engines for Asia’s fourth-largest economy, along with electronics and automobiles.