Friday, April 29, 2011

LNG order boom to hit $140bn

As newbuilding orders for LNG-related ships or offshore facilities are expected to increase, Korea's large shipbuilders are picked up as the biggest beneficiary of it.

Seoul-based Shinyoung Securities disclosed yesterday that "With offshore new orders increasing, Daewoo Shipbuilding & Marine Engineering and Samsung Heavy Industries would enjoy the biggest benefit since they have the highest proportion of LNG carrier and offshore sectors in their business portfolio."

Eom Kyeong-ah, analyst of the securities company said, "LNG has been emerging as a substitute for nuclear energy since the terrible Fukushima nuclear shock in Japan. Japan is believed to be demanding 43 LNG carriers over the next 10 years."

"And world's combined newbuilding orders for LNG carriers would come to 284 ships over the next seven years, and orders for LNG-FPSO and LNG-FSRU to replace traditional LNG export and import terminals would total 20 and 33 units respectively," she added.

As a result, Korea's combined new order value of LNG carriers and offshore plants for the next seven years is expected to reach more than $140bn.

Eom also prospected, "Korea's big three yards have, together, scored $17.5bn in new orders so far this year while their combined new order target for this year is $34.2bn. In particular, the offshore business sector accounts for $11.5bn out of the new order total. So this year would see Korean yards winning the record amount of new offshore orders, considering the big amount of offshore plant orders likely to be placed in the second half of the year."

Published : April 29, 2011

Source: Asiasis


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Shipbuilders enhance info security

As a security issue is recently attracting considerable attention from all kinds of industries across Korea, domestic large shipyards are also entering into a state of emergency to come up with good system to enhance information security.

Since the core data of Korea's large shipbuilders has gone through a long history to be completed, the leaking out of the data could cause serious damages not only to the shipyards but also to the country.

With this, some domestic yards are looking for multilateral measures to be armed with organized information security systems.

For instance, Hyundai Heavy Industries and Samsung Heavy Industries are said to be preparing for the acquisition of an international security certificate over all company sectors including the IT.

In particular, Hyundai picked up Ernst & Young Advisory this month as a business consultant for the ISO 27001 certificate and has began to push for the project in full swing.

Hyundai plans to come up with world-class security system that matches the company's status as a global corporation through the project. And the yard is also focusing on forming measures to continuously operate and maintain the information security management system.

Meanwhile, Samsung is targeting to be certified in July this year while Daewoo Shipbuilding & Marine Engineering has already acquired the ISO 27001 certificate in 2006 in the ship design part for the first time among domestic shipbuilders.

Published : April 29, 2011

Source: Asiasis


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Seaspan, "Shopping for ships"

News leaked out on Tuesday that South Korean shipbuilder STX Offshore & Shipbuilding, was in final negotiations for a 3 trillion won ($2.8 billion) order from Seaspan Corp., a Vancouver-based shipper.

Gerry Wang (pictured), chief executive of Seaspan, confirmed the news in an interview and said it’s a great time to be shopping for ships.

“Hyundai, Samsung, Daewoo, STX, all the shipyards are talking to us. We have the requirements and we have the money,” he said.

“It’s a beauty contest. It doesn’t mean the first one gets selected. We’re talking to everybody.”

During the industry’s latest peak, when orders were soaring from 2005 to 2007, ship buyers paid premiums on ships and for drydock time that assured delivery at certain date. And they had to largely accept the designs that shipbuilders foisted on them, which were optimized for the logistics of the manufacturer.

Now, everything has changed, Mr. Wang said.

“This is the dream time for us. It’s absolutely a buyers’ market,” Mr. Wang said. “That’s why we can dictate the type of ships we want. That’s why innovations can be built in. They need orders to fill up the docks. They are very, very hungry.”

The ship design that Mr. Wang is asking shipbuilders to build will consume 96 metric tons of fuel a day at 20 knots of speed and just 73 metric tons a day at 18 knots.

“The shipyards in Korea are being forced to produce the designs of tomorrow,” Mr. Wang said. “The ships we are contemplating to order are exactly that type, lighter, more efficient. This is a paradigm shift.”

Published : April 29, 2011

Source: Asiasis


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NK type-approves corrosion-resistant steel

Thursday, April 28, 2011

Koreans shriek of delight

A number of foreign shipowners are recently looking for Korean shipyards to build newbuilds.

This is because Japanese ships are too expensive due to high yen, and Chinese shipyards retain relatively less advanced technology. So the successive waves of newbuilding orders are pouring in Korean yards.

However, domestic large shipyards cannot digest all of those new orders because of their full shipbuilding schedule by the end of 2013. Thanks to this, other small and medium yards are also wanted to take the new orders.

According to industry sources, some global shipowners looking for Korean yards to build LNG carriers are even contacting Sungdong Shipbuilding & Marine Engineering, which has not built LNG carriers before.

For instance, one of those shipowners, which has had newbuilding talks with Sungdong, had failed to make a deal with Hyundai Heavy Industries, Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering.

Therefore, the shipowner has come to try making a deal with the yard that does not have any experience in building LNG carriers since the big yards cannot take new orders anymore due to their full dock.

Meanwhile, Korean yards think that there is no necessity for taking new orders too hard since they do not have enough space in dock and a recovery in newbuilding prices takes long time. With this, happening is a strange phenomenon that shipowners are begging shipbuilders for newbuilds.

One insider from the shipbuilding industry says, "If the fuel efficiency of Korea-built ships is improved by at least 10%, the newbuilding prices would increase by as much as 15%. The skyrocketing oil prices in recent days would lead to Korean yards continuously getting more newbuilding orders in the future."

Lee Seok-jae, director of Seoul-based Mirae Asset Securities, remarks that "Korean shipyards should take advantage of the strengths of Japanese and Chinese yards. In the situation that the newbuilding prices have yet to recover, what the yards need now is the strategy to offer higher prices after the newbuilding prices improve rather than just taking new orders as much as possible to make the dock full."

Published : April 28, 2011

Source: Asiasis


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Indian breakers exceed Bangla rivals

Indian tanker demolition prices have risen 5% so far this month as the country’s shipbreakers embark on a traditional rush of buying up scrap ships before the onset of the monsoon season in mid-May.

The average price paid for tankers to be demolished by Indian breakers stood at $525 per ldt at the end last week, compared with $500 per ldt on April 3, according to US-headquartered cash buyer GMS.

India’s demolition rate for general cargo vessels also rose by a similar amount this month, climbing 4% to $495 per ldt from $475 per ldt.

In contrast, the price paid for tankers to be recycled in Bangladesh, which has historically paid the highest rate among for the four major Asian shipbreaking countries, rose by only 1% this month, as buying activity remains subdued. Tanker scrap prices have climbed from $510 per ldt to $515 per ldt.

Bangladeshi rates for general cargo vessels did not change, ending the month at $485 per ldt, the same price as at the start of April.

India is the “market of the moment”, with steel prices in Alang staying firm compared with “some weakening” in Chittagong, Bangladesh, said GMS.

Published : April 28, 2011

Source: Asiasis


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CSSC banks $100m profit in Q1

China State Shipbuilding Corporation (CSSC) announced on 25th that its net profit for the first quarter of the year hit CNY 704m ($100m) and operating revenue came to CNY 6.767bn, increasing by 1.59% and 20.14% y-o-y respectively.

According to a report recently released by one of Chinese Securities companies, CITIC Securities (CITICS), CSSC's operating revenue for last year stayed in CNY 29.85bn, increasing by 18.3% with its gross profit margin staying in 19% up by 5.3%p y-o-y. The increase in the margin was driven mainly by the drop in raw materials costs.

As the world economy has begun to get better, CSSC has also seen newbuilding orders increasingly placed at its yard with newbuilding prices improving as well.

The total of new orders CSSC won during 2010 came to 66 ships of 8.48m DWT, rising by 150% compared with the previous year, which is quite a fast growth speed.

Published : April 28, 2011

Source: Asiasis


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Indian shipbuilding to rise

The Indian shipbuilding and repair market is estimated to double from its 2010 revenue of $1.6 billion in the next five years.

The primary driver of this growth will be increasing penetration of Indian shipbuilders and repairers in the offshore supply vessels (OSVs) segment.

“Indian companies have established strong credentials in the building and repair of OSVs, resulting in a spike in orders for such vessels. The limited capacities in the OSV segment in leading shipbuilding nations such as Japan and South Korea are resulting in diversion of orders to India, driving up the fortunes of Indian shipbuilders,” a recent study by Frost & Sullivan says.

Other factors like the ageing fleet of shipping companies in India are also broadening the scope for Indian shipbuilding companies.

Analysts say that about 40 per cent of the Indian fleet is more than 20 years old and ship owners will need to pump in $4 billion to replace this fleet in the next four to five years.

The growth potential is further enhanced with the Government aiming for the country's shipbuilding sector to capture a five per cent share in the global market by 2017.

Plans are afoot to build a world-class commercial shipyard on the eastern coast.

India currently has a mere one per cent share in the global shipbuilding and repair market, estimated at $160 billion.

Although the outlook for this sector is bright, industry analysts say that there are some challenges that players in this segment should surmount.

“India has a vast coastline, but there is an acute shortage of deep draft water space along the coast. This restricts the type and size of ships that can be built or repaired, which is stemming the full growth potential,” says Mr Srinath Manda, analyst with Frost & Sullivan.

Published : April 28, 2011

Source: Asiasis


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Meetings for offshore parts localization

Some Busan-based ship equipment suppliers in South Korea had a meeting on 26th for a topic of 'support plan for settling the current difficulties of Busan-based shipbuilding and offshore parts producers' with a government official, Cho Kyeong-tae, from the Knowledge Economy Committee of the National Assembly.

The meeting was attended by 20 CEOs and executives from major ship equipment manufacturers based in Busan such as STACO, Oriental Precision & Engineering and NK.

Most of the attendees agreed on the fact that the localization of offshore plant equipment is the most urgent to make a quick respond to market changes caused by the increasing new orders for offshore plant and building of Korea's shipbuilding and offshore industry.

They stressed, in chorus, that there is need for national-wide policies and budget support for the home production.

Furthermore, they said, "Korea's shipbuilding industry is seriously lack of the infrastructure to lead and help small- and medium-sized suppliers such as testing & certification system. So the government should take a positive attitude towards the establishment of the offshore plant technology institute currently conducted by the city of Busan to poster the offshore plant business in southeast region."

They also pointed out the fact that Korea is the world number one builder for offshore plants, but the localization rate of equipment stays in only 20% to 30% in the sector.

Some solutions for the structural problems of Korea's offshore plant industry were suggested in the meeting - conducting building project of domestic offshore plant, developing home production of offshore plant parts with the government taking a leading position, and forming a foothold for cooperation among large shipyards, S&M yards and equipment producers.

Published : April 28, 2011



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Wednesday, April 27, 2011

Daewoo CEO stresses ‘Subsea‘

"Subsea sector will be the key to securing a differentiated competitiveness in the future"

Nam Sang-tae, chairman of the Korea Shipbuilders' Association (Koshipa) and president of Daewoo Shipbuilding & Marine Engineering, has recently revealed, through one of Korea-published economic magazines, that he established a central research institute earlier this year by integrating all the R&D businesses he had conducted, stressing technology acquisition for subsea business.

Regarding the 'localization project for deep-seafloor offshore plant', which is one of the six national-wide projects led by the R&D strategic planning group of Korea's Ministry of Knowledge Economy, he stated, "Since it costs a lot to secure subsea technology, I will look for ways to cooperate and share with shipbuilding & offshore plant suppliers."

Some industry experts prospect the localization project would require around KRW 150bn ($138m), and the government has decided to pay the full amount of research funding to one of Korea's big three to be chosen.

The words that came out through Mr. Nam's mouth on the day allude that the big three can conduct joint development in cooperation.

Deep-sea drilling technology has yet to be pioneered worldwide with only some European companies currently testing related technologies.

However, as onshore and offshore oil fields are gradually being exhausted accompanied with the increasing oil prices these days, the deep-sea oil field development is attracting many eyes.

Mr. Nam remarked, "Most shipyards will probably see the sales of the offshore plant sector rising day by day. Reflecting this trend, I will complement the current structure of the Koshipa centering on the shipbuilding business and am also considering changing the name of Koshipa to Korea Shipbuilding & Offshore Association." And the Koshipa plans to involve offshore plant results in counting and announcing the existing shipbuilding statistics, according to him.

On the matter of selling approach over Daewoo, he said that government-issued stock can be considered, and, most of all, the stabilization of the company is the biggest wish from the perspective of employees.

Lastly, he made a comment on industry economic outlook for this year, saying, "Raw materials seem to be rising in price in the wake of the earthquake in Japan, but overall conditions will be fine. Some say the shipbuilding industry faces favorable market situations, but it depends on each yard's new order strategy pattern. That is, the good conditions can be for long-term or short term according to the different types of new order intake"

Meanwhile, he revealed that Korea's shipbuilding industry can be armed with competitiveness in labor cost by combining South Korea's technology with North's qualified labor force.

Published : April 27, 2011

Source: Asiasis



STX eyes ‘Mega Repair Yard‘

South Korea's Busan Newport 'Mega Repair Yard Project', which has been stagnant for two years without any progress against the backdrop of prolonged recession in global shipping and shipbuilding industries, is expected to make its first step sooner or later.

The government set up and confirmed a business plan to establish a large repair yard complex at a site behind Busan Newport through private funds in April 2009.

At present, Korean repair yards can accommodate up to 2,000 to 3,000-ton vessels. With Korea-registered ocean-going ships now totalling around 900 and most of them being over 4,000 ton class, they have to visit foreign repair yards in China, Vietnam, etc.

As global economy has been facing slump in shipping and shipbuilding industries, few privately-run companies showed interest in participating in the Busan Newport Mega Repair Yard Project.

But recently it was revealed that STX Group is positively reviewing the project.

STX Pan Ocean vice chairman Lee Jong-chul said, "We might bid for the Busan Newport Repair Yard project in a consortium."

STX expects a significant synergy effect between the repair yard, STX Marine Service and STX Pan Ocean.

The construction of the repair yard would cost around KRW 340bn ($313m).

Meanwhile, an official from STX said, "We are conducting a feasibility study on the Busan Newport Repair Yard Project but nothing has been decided yet."

Published : April 26, 2011

Source: Asiasis



China imports most ship parts from S Korea

Korea is known as the major supplier of ship equipment to Chinese shipyards.

According to China Customs Statistics, the combined export and import value of Chinese yards during January and February this year came to $1.087bn, increasing by 23% y-o-y. Out of the total value, exports accounted for $389m up by 30% while imports for $698m up by 20%.

During the period, China-produced ship equipment was exported to 147 countries or areas, and the biggest market of China was Asia with the total export value of $255m up by 58% y-o-y.

Europe and North America followed after Asia with $70.45m down by 15% and $41.9m up by 23%, respectively.

By nations, Singapore was the largest export market of China with overall export value of $65.92m up by 265%, Oman was the second and Japan was the third.

Meanwhile, China imported ship equipment from 53 countries or regions, in total, during the period.

The combined import value from Asia came to $452m, increasing by 32% y-o-y, followed by Europe with $203m down by 0.2% and North America in third.

By nations, China imported the biggest amount of ship equipment from South Korea with the total import value of $260m up by 28%.

Japan was the second largest after Korea with $176m up by 54% and Germany in third with $96.95m up by 18%.

Published : April 27, 2011

Source: Asiasis


Rongsheng acquires engine maker

China's Rongsheng Heavy Industries has snapped up compatriot engine maker Quanchai Group.

Rongsheng will pay CNY 2.15bn ($330m) for Shanghai-listed Quanchai, allowing it to move into the high-speed diesel engine market.

Quanchai is currently 100% owned by the Government of Quanjiao County, Anhui Province.

Rongsheng is buying the stake through its subsidiary Jiangsu Rongsheng Heavy Industries, in which it owns 96.09%.

Published : April 27, 2011

Source: Asiasis


Hyundai Steel ups plate price

Following Posco's price hike by KRW 160,000 ($147.5) per ton on its steel products, Hyundai Steel has also decided to raise its product price by the same amount.

Hyundai Steel gave notice to its customer companies on April 26th that it will raise the price of thick steel plate from current KRW 950,000 to KRW 1,110,000 and the price of hot-rolled steel from KRW 900,000 to KRW 1,060,000.

The hiked price will be applied to the products rolled out from the next month.

Meanwhile, Dongkuk Steel Mill is also in negotiation with customer companies on raising the thick steel plate price by KRW 160,000 per ton.

Published : April 27, 2011

Source: Asiasis