Gloomy 2017 for Korea Shipyards

Maritime Activity Reports, Inc.

December 27, 2016

3D Image of Logistics Support Vessel HHI to Build Under New Zealand Defence Force’s MSC Project. Photo: Hyundai Heavy Industries

3D Image of Logistics Support Vessel HHI to Build Under New Zealand Defence Force’s MSC Project. Photo: Hyundai Heavy Industries

 South Korea‘s three majors shipbuilders are forecast to get much fewer orders next year, Yonhap reports quoting industry sources.

 
The three shipyards - Hyundai Heavy Industries (HHI), Samsung Heavy Industries (SHI) and Daewoo Shipbuilding & Marine Engineering (DSME) - are struggling to set their order targets for next year due to the global vessel glut and fiercer competition from Chinese rivals.
 
The top three shipbuilders are expected to suffer from tough business conditions in 2017 on financial front too. 
 
DSME is shooting for a 2017 order number that is similar to this year’s goal of $6.2 billion. At the start of the year, the troubled shipyard aimed to win orders worth $10.8 billion this year but was forced to cut the figure in June.
 
Daewoo Shipbuilding is doing its best to secure enough liquidity for the bond payments and is in the process of selling non-essential assets including subsidiaries and real estate.
 
HHI has reportedly set its 2017 order target at a level similar to this year’s US$9.5 billion.  The shipyard bagged contracts worth $7.1 billion, much lower than its goal of $19.5 billion set at the start of the year.
 
SHI to set its 2017 order target at a level that is slightly higher than $5.3 billion for this year, as the company is likely to clinch a 3 trillion-won ($2.50 billion) order for the construction of a floating LNG unit from Italian petroleum giant Eni early next year
 
HHI, DSME and SHI  have all posted multiple quarters of losses in the past year-and-a-half amid delivery delays and a plunge in demand for new vessels and oil platforms.
 
The top four Korean shipbuilders have 2.3 trillion won ($1.9 billion) in notes maturing next year, the most in Bloomberg-compiled data going back to 1997.
 
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