S. Korea's top 3 shipyards overachieve annual order target

[Photo by Korea Shipbuilding & Offshore Engineering Co.]

South Korea’s shipbuilding majors have overachieved this year’s annual order target on the rising demand for container carriers in line with global commerce recovery and cleaner-fuel sea transport.

According to shipbuilding industry sources on Thursday, Korea’s top three shipyards—Korea Shipbuilding & Offshore Engineering Co. (KSOE), Daewoo Shipbuilding & Marine Engineering Co. and Samsung Heavy Industries Co.—have exceeded or near meeting their yearly order goals.

It is the first time since 2013 that the country’s three shipyards have all met their yearly goals.

Korea Shipbuilding & Offshore Engineering, the holding company of Hyundai Heavy Industries Group, has surpassed its annual target of $14.9 billion by 30 percent upon netting $19.4 billion worth orders to build 201 vessels including its mainstay liquefied natural gas (LNG) carriers as well as high value-added vessels including mega container ships, very large crude carriers (VLCC), liquefied petroleum gas (LPG) carriers and petrochemical carriers.

Daewoo Shipbuilding & Marine Engineering has recently won 1 trillion won ($850.8 million) worth contracts to build four LNG carriers. With the addition, DSME has bagged a total of $8 billion orders for 46 vessels, also overachieving its yearly target of $7.7 billion. This is the first time since 2014 the shipbuilder has met its yearly order target. Its order backlog amounts to $22.2 billion, which equates to two years’ worth of production.

[Photo by Samsung Heavy Industries Co.]

Samsung Heavy Industries has clinched a total of $7.8 billion orders, or 86 percent of its annual target of $9.1 billion. The company is expected to achieve the target as early as next month as it is in the final talks with Russia’s state-run gas producer Novatek to sign a deal worth more than $2.6 billion to build seven icebreaking shuttle tankers, six ice-resistant LNG carriers, including two options for Arctic LNG2 project, Russia’s major natural gas project.

The shipbuilders are anticipating their order book would further stretch in the coming months, hoping to win another windfall of LNG carrier orders from Qatar Petroleum. The state-run oil company of Qatar signed LNG ship building slot contracts for more than 100 vessels with the Korean trio in June last year.

Rising demand for eco-friendly vessels and strong vessel value are another upside. Clarkson Newbuilding Price Index, which shows price changes in newly built ships, came at 147.5 as of Sept. 10, surging 16 percent in the first nine months this year to a 12-year high.

Rising raw materials and thick steel plate prices may add more than 2 trillion won in cost for the shipbuilders. Last month, steel makers like Posco and Hyundai Steel have raised the price of thick steel plate by 300,000-400,000 won to 1.1 million won per ton.

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