South Korean Shipbuilding No.1 Again

Maritime Activity Reports, Inc.

January 6, 2019

Image:  Hyundai Heavy Industries Co

Image: Hyundai Heavy Industries Co

South Korea’s shipbuilding industry reclaimed the title of world’s biggest shipbuilder (in terms of orders volume) in 2018 for the first time in six years, since it had conceded No.1 spot to China in 2012.

The global orders of Korean shipbuilders stood at 12.6 million compensated gross tonnage (CGT) last year, accounting for 44.2 percent of the total orders, according to Clarkson Research, shipbuilding and marine analysis agency in the U.K.  The orders of Chinese shipbuilders were 9.1 million CGT, accounting for 32 percent of the total share.

A report in Business Korea quoted Clarkson Research saying that  the major three South Korean shipbuilders made a remarkable progress last year in LNG carriers market. Hyundai Heavy Industries, Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering together gained 66 LNG carrier orders last year out of the total 76 orders.

Their performance is also forecast to be strong this year, as the current upswing in the LNG carrier market is expected to continue. The global LNG carrier market is expected to post a nearly 5 percent rise on average over the next five years due mainly to rising demand for cleaner fuels, including natural gas, globally, according to London-based research firm Technavio.

CEOs from the big three shipbuilders have also vowed to reclaim the nation’s title of “shipbuilding powerhouse” in their New Year’s address.

A report in Donga said that while the industry is certainly rebounding, it is too soon to conclude a full-blown revival as there are a number of issues that need to be addressed.

The report quoted Han Young-seok and Ga Sam-hyun, co-presidents of Hyundai Heavy Industries saying that: "We’ve reached the target despite the sluggish market demand that is still in the process of recovery, but we are still faced with a host of challenges such as securing jobs for naval plants and improving balance sheet of shipbuilding.”

While shipbuilders are making a restructuring effort through downsizing and wage freeze, there still exists a significant need for further cost cuts, it said.

However, media reports say that the market is still in a slump, as global oil major firms have not been active in investment amid low oil prices. Added to the woes, competition is becoming fiercer in the market, as rivals from Singapore and China are luring oil major firms with low prices.

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