South Korean shipbuilders saw a 35 percent year-on-year drop in new orders from January to May, according to shipping industry tracker Clarkson Research Services on Thursday.
During the five-month period, Korean shipbuilders secured a total of 3.81 million compensated gross tonnage, representing 24 percent of the global market — second to China, which led with 7.86 million CGT, or 49 percent.
The decline is partly attributed to selective order-taking, as Korea’s major shipbuilders — HD Hyundai Heavy Industries, Hanwha Ocean and Samsung Heavy Industries — have prioritized high-value-added vessels such as liquefied natural gas carriers rather than container ships.
Their docks are currently occupied with orders scheduled for delivery over the next three years.
However, the drop in orders is also reflects a sharp downturn in the global shipbuilding market.
Total new global orders during the period fell 45 percent from a year earlier to 15.92 million CGT, raising concerns among some industry observers about the possibility of the current market cycle slowing in the coming years.
Industry sources noted that many shipping companies are delaying new orders amid uncertainties in global trade and falling freight rates, driven in part by ongoing geopolitical tensions between the US and China.
The Shanghai Containerized Freight Index, a widely used indicator of shipping rates, exceeded 3,000 in June last year but dropped to just over 1,200 in May this year. Although it has seen a sharp rise over the past three weeks, securities firms suggest this is a temporary increase driven by the US’ short-term tariff deferral on Chinese goods.
As a result, Korean shipbuilders saw a decrease in their backlog, with total outstanding orders falling by 8 percent, or 3.09 million CGT, compared to the same period last year.
As of early June, HD Korea Shipbuilding & Offshore Engineering — parent company of HD Hyundai Heavy Industries and two other smaller shipbuilders — had only achieved 38.7 percent of its annual order target of $18 billion. Samsung Heavy Industries had reached 27 percent of its full-year sales goal of $9.8 billion.
Source: Korea Herald