EU Blames South Korean Yards For Low Prices

The European Union on Wednesday blamed low prices offered by South Korean shipyards for the depression in the world shipbuilding market and accused Korea of pricing ships at below cost. A report by the EU's executive Commission found the world shipbuilding market continued to face serious difficulties.

"Supply still outstrips demand and there are few indications that this situation may improve," the Commission said, adding that the depression in prices was "caused by low offer prices from South Korean yards."

Repeating charges it has leveled often in the past, the Commission said its detailed cost investigations "continue to indicate that Korean yards are still taking orders at prices which are not covering all costs".

South Korea is the biggest shipbuilder in the world. Its shipyards took more than 40 percent of all new orders in the first eight months of this year, compared with 25 percent for Japan, 16 percent for the EU plus Norway and 19 percent for the rest of the world, the Commission said.

Despite higher orders in the first eight months of this year due to favorable market conditions in liquid bulk shipping and to the development of very large container ships, ship prices had not recovered from the "massive drop" since 1997, it said.

There were however some signs of improvement compared with the low levels at the end of 1999, it said.

The report, due to be discussed by EU industry ministers on December 5, provides ammunition for European shipbuilders and some EU officials who have been strongly critical of Korean shipbuilding practices.