S. Korea: Shipyards May Raise Prices 5%

Maritime Activity Reports, Inc.

June 22, 2006

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 by about five percent to take advantage of record orders and protect their profits from rising costs, according to a report from Bloomberg. 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 $125 million in December, the Korea Shipbuilders Association said, citing Clarkson Plc. 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 ordered vessels before a United Nations rule came into effect in April banning single- hull ships by 2010. (Source: Bloomberg)
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