The order backlog of major Korean shipbuilders has exceeded 190 trillion won in the first quarter of this year, approaching the 200 trillion won mark.
This is due to the shipbuilding industry entering a supercycle, which has historically seen boom and bust cycles every 20-30 years, coupled with a focus on securing orders for high value-added vessels.
The recent U.S.-China conflict has also created a favorable environment, as the global shipping industry increasingly perceives Chinese-built ships as a risk.
According to the shipbuilding industry on May 11, the combined order backlog of HD Korea Shipbuilding & Offshore Engineering, Hanwha Ocean, and Samsung Heavy Industries stood at $137.258 billion (approximately 192 trillion won) at the end of the first quarter this year, based on delivery schedules.
According to Clarkson Research, a British shipbuilding and shipping market analysis firm, the order backlog of major Korean shipbuilders peaked in 2008 and 2014. In 2008, it reached about $143.6 billion, and in 2014, $144.9 billion, which is equivalent to about 200 trillion won at current exchange rates. The recent backlog is approaching these peak levels.
HD Korea Shipbuilding & Offshore Engineering recorded an order backlog of $74.228 billion (about 104 trillion won) in the first quarter. This figure combines orders from its subsidiaries HD Hyundai Heavy Industries, HD Hyundai Mipo Dockyard, and HD Hyundai Samho Heavy Industries. Samsung Heavy Industries reported $31.6 billion (about 44 trillion won), while Hanwha Ocean recorded $31.43 billion (about 44 trillion won) for the same period.
Not only the order backlog but also the operating profits of the three shipbuilders have significantly improved. HD Korea Shipbuilding & Offshore Engineering’s operating profit for the first quarter this year increased by 436.3% year-on-year to 859.2 billion won. Hanwha Ocean’s operating profit surged by 388.8% to 258.6 billion won, while Samsung Heavy Industries saw a 58.0% increase to 123.1 billion won.
The operating profit margin has also shown substantial improvement. HD Korea Shipbuilding & Offshore Engineering’s operating profit margin reached 12.7% in the first quarter. This is an exceptional figure for the shipbuilding industry, which typically struggled to exceed 5%. Industry experts attribute this to the clearance of past low-profit orders and a significant increase in the proportion of high value-added vessels such as liquefied natural gas (LNG) carriers.
Source: Business Korea