The shipbuilding industry’s’Idan order wins’, the local economy’s’resurrection’ is ringing

The shipbuilding industry’s’Idan order wins’, the local economy’s’resurrection’ is ringing

Input: 2021-01-06 19:28:08Revision: 2021-01-06 19:37:59Posted: 2021-01-06 19:39:10 (3 pages)

Large domestic shipbuilders have been continuing a massive’order rally’ since the beginning of this year after breaking through Corona 19. If the shipbuilding industry continues to rise, it is expected that it will be a sign of a recovery in the Southeast region’s economy.

On the 5th, Korea Shipbuilding & Marine Engineering, a shipbuilder of Hyundai Heavy Industries Group, announced on the 5th that it has won an order for 6 ultra-large container ships promoting 15,000TEU (1TEU is one 20ft container) class LNG with a shipping company in Asia for about 900 billion won. The ships that were ordered this time will be built four at Hyundai Heavy Industries in Ulsan and two at Hyundai Samho Heavy Industries in Yeongam, Jeollanam-do, and delivered to ship owners sequentially from the first half of 2023. Samsung Heavy Industries also succeeded in shaping the new year by winning an order from Pan Ocean, a domestic shipping company, for a 174,000㎥-class LNG carrier worth KRW 193 billion. As a result, the number of LNG carriers that Samsung Heavy Industries has received since November last year has increased to a total of 20. Only orders announced by the two shipbuilders this year exceed 1 trillion won. Since the second half of last year, overseas shipping companies, who have looked after Corona 19, sent love calls to Korean shipbuilders that have unrivaled technology for LNG ships, resulting in a sharp increase in orders.

Hyundai Chosun Holdings Korea Shipbuilding & Marine Engineering

Won an order for 6 large conships worth 900 billion won

Samsung Middle East won an order for 1 vessel worth 193 billion won

Hanjin China and Daeseon Shipbuilding also secured work

Large scale order for LNG carrier in Qatar

The largest quantity to come… Big 3’order life and death’

The shipbuilding industry estimates that the situation has changed from the first half of last year, when orders were plagued by the spread of Corona 19. In particular, it is expected that orders for container ships will pour out in the first half of this year. The Shanghai Container Freight Index (SCFI) has risen for 12 consecutive weeks, hitting a record high.

In particular, the biggest issue for the shipbuilding industry this year is the main contract for the Qatar project. In the industry, Qatar’s state-run oil company QP (Qatar Petroleum) is expected to order large-scale LNG carriers this year. Earlier, Korean shipbuilding Big 3 (Hyundai Heavy, Samsung Heavy, and Daewoo Shipbuilding) signed a’slot (to secure dock)’ contract with Qatar before the main contract.

Accordingly, Korea Shipbuilding & Marine Engineering set the order target for this year at $14.9 billion (16 trillion won), which is $3.9 billion higher than last year’s $11 billion. The rest of the shipbuilders are expected to disclose their order targets during this month. An official from Hyundai Heavy Industries said, “It is hard to say that the shipbuilding industry has entered a recovery phase, but we will focus our capabilities on receiving ship orders, including the main contract in Qatar, as a bridgehead to save the stagnant shipbuilding industry.” An official from Samsung Heavy Industries also said, “The risk from the aftereffects of Corona 19 is still there, but we will use the year-end rise as an opportunity to rebound, and we will start a full battle for orders.”

Shipbuilding companies are working hard to respond to quarantine, fearing that they will be ankled by the Corona 19 incident in a situation where new orders are being placed one after another. Due to the nature of the shipbuilding industry, it takes at least two years to receive orders and deliver them, so they are keen to prolong Corona 19. This is because, due to the labor-intensive structure of the shipbuilding industry, if even one infected person emerges, the entire operation is inevitable. Accordingly, the three shipbuilders have formed a response team at the company level and are making company-wide efforts such as banning business meetings, banning in-house/external meetings, banning face-to-face and group training, banning domestic business trips, and making masks mandatory.

The Busan shipbuilding industry is also expecting a recovery in the shipbuilding industry.

Hanjin Heavy Industries & Construction, which is undergoing the sale process through the Dongbu Construction Consortium, has secured the supply of special ships for defense production for three years, and in the case of commercial ships and LNG carriers, it is preparing to start construction anytime a new owner is decided. Daeseon Shipbuilding also secured stable work by winning orders for 10 ships in a row, including two orders for 50,000 ton MR tankers worth 160 billion won from European ship owners at the end of last year.

Shipbuilding equipment companies in Busan are expressing expectations for industrial revitalization while securing supplies for next year. Some companies have even finished preparing for facility expansion. In Dong-gu, Ulsan and Geoje, companies are also preparing to reopen factories or expand production capacity.

Choi Geum-sik, chairman of the Busan Shipbuilding & Marine Equipment Industry Cooperative Association, predicted, “With this year’s increase in orders, the shipbuilding industry will be able to escape the recession tunnel and enter an upward curve from next year.” An official from Sejin Heavy Industries in Ulsan also said, “The shipbuilding Gyeonggi Province, which has been stagnant for several years, seems to be gradually recovering due to the news of successive orders from large companies.

However, it is pointed out that financial support, such as extending the maturity of banks, is also needed as some places have to endure without volume this year.

Reporters Seunghyuk Kwon, Minjin Kim, Younghan Kim, Hyunjung Lee [email protected]