South Korea's Shipyards May Raise Prices

Wednesday, June 21, 2006
Bloomberg has reported that South Korea's seven shipbuilders, which delivered 38 percent of the world's vessels in 2005, said they may raise the prices of new ships to take advantage of record orders and protect their profits from rising costs. Carriers of containers, oil and minerals may cost about 5 percent more this year, said Hyundai Samho Heavy Industries company officials. Higher prices protect shipbuilders' earnings from the Korean won's gains against the U.S. dollar and shield them from steel costs that have risen 70 percent since 2003. A third year of rising ship prices add to the costs of Taiwan's Evergreen Marine Corp. and other shipping lines which carry an estimated 90 percent of global trade.

The price of a supertanker that can hold 2 million barrels of oil rose 4 percent to about $125m in December, the Korea Shipbuilders Association said. The price of a vessel that can carry 3,500 20-foot containers increased 2.8 percent to $54 million from last year.

Hyundai Heavy Industries Co. and other South Korean shipbuilders received a record $12 billion in new contracts in the first quarter as fleet owners rushed to order vessels before a United Nations rule came into effect in April banning single- hull ships by 2010.

South Korean shipyards had 38.5 percent of the world's back orders in the first quarter, enough to stay busy until 2009. Shipping lines putting in orders today will have to wait until 2010 for delivery as backlogs stand at a record 1,031 vessels.

Samsung Heavy received a $1.5b order for 14 container ships from three companies including Panama's Naviera Daniela SA and Greece's Danaos Shipping Co. on June 7. The order included so-called post- Panamax vessels that can transport more than 7,000 20-foot cargo boxes each. Source: Bloomberg

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