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S. Korea: New Shipbuilding Orders Set To Drop In 2022

New shipbuilding orders are forecast to decrease next year. This is because container shipping companies which aggressively placed shipbuilding orders due to high shipping rates are more likely to decrease their orders.

Investment in container ships, which pushed up new shipbuilding orders in 2021, will slow down in 2022, forecast the Overseas Economic Research Institute of the Export-Import Bank of Korea in a report on Oct. 24. This is expected to lead to a drop in global orders next year.

The report predicted that global orders for new shipbuilding and orders will reach 41.3 million CGT (standard converted tons) and US$96.5 billion (about 113 trillion won), respectively, in 2021. The figure jumped 81.1 percent and 94.5 percent, respectively, from 23.2 million CGT and US$49.6 billion (58 trillion won) in 2020. However, next year’s order volume and order value are expected to fall 15.3 percent and 10.9 percent, respectively, from 2021 to 35 million CGT and US$86 billion (101 trillion won).

The report predicted that Korea’s shipbuilding order intake will also decrease in 2022 as global orders will shrink. While Korean shipbuilders are expected to record 17 million CGT and US$42 billion in the newbuilding market in 2021, their order volume and order value are expected to fall 23.5 percent and 19.0 percent, respectively, to 13 million CGT and US$34 billion.

The report explained that maritime fares soared three to four times in 2020, leading to a sharp increase in container ship orders in 2021. It added that due to increased supply, container ship orders will naturally decline next year, which will have an impact on the total number of orders.

From January to September 2021, orders for container ships 12,000 TEUs or larger stood at 10.75 million CGT (180 vessels), up 1,504 percent from 670,000 CGT (nine vessels) in 2020. On Oct. 22, the Shanghai Container Freight Index (SCFI), which represents levels of fares for maritime transport routes, also recorded 4,583.39, more than triple from the same period of 2020.

In addition, the report analyzed that despite environmental regulations that the International Maritime Organization (IMO) will begin to execute in earnest in 2023, new investments in ships other than container ships and liquefied petroleum gas (LPG) carriers did not yet begin, so this fact might pull down overall shipbuilding orders next year.

Source: Business Korea

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