Korean Shipbuilders Likely to Receive Reflective Benefits from Cross-strait Conflict

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A cross-strait conflict between Taiwan and China is creating new opportunities for the Korean shipbuilding industry. Taiwanese shipping companies and ship owners are turning to Korean shipbuilders instead of Chinese.

On June 13, Samsung Heavy Industries was shortlisted for a container order from Taiwan’s Evergreen, according to sources in the shipbuilding industry. The Korean shipbuilder is competing with Japan Marine United. Evergreen, a Taiwanese shipping company, has begun a tender for 24 16,000-TEU dual-fuel container ships. The contract is estimated to be US$4 billion (5.2 trillion won).

Evergreen requested Korean, Chinese, and Japanese shipbuilders to participate in the tender, but only shortlisted Korean and Japanese shipbuilders. Samsung Heavy Industries, in particular, has a long history of building ships for Evergreen. In March 2021, it won an order for 20 15,000-TEU container ships from Evergreen. The order was valued at 2.8 trillion won (US$2.2 billion).

Samsung Heavy Industries also continues to do business with Taiwan’s Wan Hai Lines. In March 2022, it signed contract to build five container ships worth 803.6 billion won (US$629.5 million) for the company.

Recently, HD Korea Shipbuilding & Offshore Engineering (KSOE) signed a contract with Taiwan’s Yangming Marine Transport to build 15,000 TEU liquefied natural gas-powered container ships. The order is to build five vessels and is valued at 1.2392 trillion won (US$970.68 billion). HD HHI will build the mega container ships at its Ulsan shipyard and deliver them starting in 2026.

In March 2021, HD KSOE won a contract for five 13,200 TEU container ships from Wan Hai Lines. The contract was worth 637 billion won (US$499 million). The container ships have been delivered sequentially since the first half of this year. In addition, Hyundai Mipo Shipyard signed a US$119.4 billion contract with Evergreen in December 2019 to build and deliver four container ships. However, Hanwha Ocean (formerly Daewoo Shipbuilding & Marine Engineering) has not landed any vessel order from Taiwan since the 2010s.

Shipbuilding industry insiders forecast that a prolonged cross-strait conflict will give reflective benefits to Korean shipbuilders. “The more the conflict between China and Taiwan intensifies, the more Taiwanese clients will avoid placing orders with Chinese shipbuilders,” said a shipbuilding industry insider. “Korean shipbuilders have had amicable relations with Taiwan and are competitive in terms of delivery time and quality.”

“If the U.S.-China conflict intensifies, financial sanctions may be imposed on Chinese shipyards, which may disrupt shipbuilding in China,” said Jung Yeon-seung, a researcher at NH Investment & Securities.

Source: Business Korea

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