Big3 brace for downturn

South Korean large shipbuilders are likely to continue their losing streak in terms of profit throughout next year, executives said.

Tumbling oil prices and fewer transactions are also sapping the demand for new ships, they add.

The price of oil, which is one of the key factors to gauge the healthiness of the shipbuilding sector, dropped to its lowest level in more than a year because of fears of another recession.

"It’s true that Europe’s worsening debt-related crisis has left the economy of the United States on the edge of a new recession, which is truly bad for shipbuilders," said Hyundai Heavy Industries chief executive Lee Jae-sung in a meeting with reporters.

"Since the second quarter, Hyundai has seen a decline of corporate profit and we are worrying about it. Next year will be difficult," the chief executive said.

"We don’t see any big turn in the global shipbuilding market next year. I have no question that the following year will also be difficult. Prices for ships have seen a steep decline," said Roh In-sik, chief executive of Samsung Heavy Industries.

"Samsung is being asked to secure our bottom line. All key indicators are bad," he added.

But Daewoo Shipbuilding & Marine Engineering painted a rather positive outlook for the industry as its chief executive believes that it’s unlikely the sector will fall into another recession.

"The global shipbuilding industry has been showing signs of a mild recovery since 2008. Although some say the worse is yet to come, I believe it’s very unlikely that the industry will fall into another deep recession," said its chief executive Nam Sang-tae.

Published : October 6, 2011

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STX inks $4.2bn orders

South Korea's STX Offshore & Shipbuilding, including its affiliated STX Europe and STX Dalian, ended up securing 45 ships totalling $4.16bn of newbuilding orders year to date, just about 35% of its $12.8bn annual target.

Newbuildings include 27 commercial ships amounting to $1.36bn, 12 special ships totalling $900m and $1.9bn of six cruiseships.

Despite its order award for 2+2 170,200-cbm LNG carriers from Sovcomflot of Russia in the end of May this year, STX shows rather poorer performance in offshore plant sector, such as drillship, LNG-FSRU and others, than Korean Big3, Hyundai Heavy Industries, Samsung HI and Daewoo Shipbuilding & Marine Engineering.

Samsung Securities reveals that STX O&S Jinhae yard holds 69% of low-priced newbuildings, such as bulker and tanker, from its total orderbook.
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Meanwhile, market forecasts that there would be new orders for more high-value ships and less ordinary commercial ships under circumstances of high oil price, regulation on CO2 emission and uncertainties toward global economy.

Analyst Han Young-Soo from Samsung Securities said, "Since Chinese yards have enough newbuilding experiences for commercial ship, newbuilding price would be hard to be recovered in a fierce competition with Chinese shipbuilders."

Han added, "High-value ships centered product portfolio is needed for long term profitability."

Regarding to this, STX said, "We plan to promote sales in offshore plant division. Also, now newbuilding order negotiations for ultra-large boxships and cruiseships being in a process, STX make a great effort to achieve target new order this year."

Published : October 7, 2011

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Philippines targets No.4

The Philippines is already considered worldwide as the leading source for good and quality seafarers in the maritime industry. Now, another laurel will be placed in the country’s marine industry, as it becomes the 4th leading shipbuilder in the world.

International shipbuilder Hanjin Heavy Industries & Construction recently inaugurated its two latest ship called The MV Star borealis and the MV Star Polaris. Around 20,000 Filipino worked on the assembly of the two vessels which according to company’s official was finished at a record time.

Last year, the company was able to build 10 ships at the Subic Bay Metropolitan shipyard. This production helped largely in pushing the country as one of the top ship producers in the world.

“Filipino workers’ skill is very much upgraded,” said Taek Kyun Yoo, Managing Director, external trade team of Hanjin.

Currently, Hanjin is also set to expand their operations in the Philippines as it has already reserved 200 hectares for added facilities.

This expansion is expected to push the current position of the Philippines as a world leader in shipbuilding ever higher in the coming years.


Published : October 6, 2011.

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Korea dwarfs China - With high-value orders

South Korean shipbuilders won the least orders last month but their accumulated order intake overwhelms their major rivals in China.

According to Clarksons, Korean yards won 10-ship orders, 390,000 cgt worth $892m in September.

The figure is way down from $7.4bn won in June alone.

Chinese also showed slump with 19-ship orders, 350,000 cgt worth $839m last month.

By the third quarter of this year Korean yards have secured 299-ship orders, 12m cgt worth $43.6bn occupying half of world newbuilding orders for 932 vessels, 23.5m cgt.

During the same nine-month period, Chinese yards won 383-ship orders, 7.35m cgt worth $13.4bn, taking 31% of world orders.

As of the end of September, Chinese orderbook stood at 2,830 ships, 49.4m cgt just ahead of South Korea with 1,333 ships, 42.2m cgt.


Published : October 6, 2011

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Samsung Offshore Forte

South Korea's Samsung Heavy Industries is forecast to fall short of newbuilding order estimation next year, however, its flat share price seems to already include Samsung's worst scenario in the near future by global recession.

Citi Global Market said, "Worries over troubled macro-economy and downtrend of newbuilding order have dragged down Samsung's value by 41% from the highest point on June 11th. Considering its competitiveness in offshore sector, however, recent downward readjustment looks excessive."

Citi prospected, "Samsung's newbuilding order intake in 2012 would fall to $11.5bn, about 25% lower than previous estimation. Decrease in new order would mainly occur from commercial ship field, however, offshore sector is likely to maintain its steady level."


Published : October 6, 2011

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Vinashin wins 20-ship order

Vietnam's state-owned shipbuilding group Vinashin clinched a deal to build 20 ships for national owner Vinalines

The two companies have signed a contract to boost Vinalines’ fleet, state media reported, without giving financial details of the deal.

Vinashin will construct dry cargoships of between 6,500 dwt and 56,200 dwt.

Six ships will be built at the Nam Trieu yard, four by Bach Dang, eight by Pha Rung and one each at Ha Long and Cam Ranh.

Published : October 6, 2011

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Big3 fog up for 2012

South Korean shipbuilders' safe target achievements being forecast, worries over 2012 shipbuilding market are spreading.

Worldwide newbuilding order dropped as nearly as 20% by global financial crisis, however, major Korean shipbuilders have made their way out with high-value newbuildings, LNG carrier, drillship, etc., for example.

According to Clarksons, Korean Big 3, Hyundai Heavy Industries, Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering, took about 40% of overall new order value y-t-d.

So far this year, Korean shipbuilders' newbuilding order totals $37.8bn, running ahead of Chinese' $10.3bn.

However, market players prospect that future market would not be much favorable to Korean shipbuliders.

Offshore facilities like FPSO and energy carriers, such as LNG-carrier, tanker are likely to secure less new orders when oil prices get lowered.

Seeing recent trend in oil price, it is possible to hit bottom afterwards on account of financial crisis in Europe and US.

An industry official said, "Further decrease in demand for offshore plant due to decline of oil price is forecast. If it really happens, Korean shipbuilders would have no other choice but to face low-margin competition with Chinese yards for small-size merchant vessels.

Published : October 5, 2011

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China keeps growth

Chinese shipbuilding industry is keeping a steady growth this year.

China Association of National Shipbuilding Industry (CANSI) recently announced Chinese shipbuilding performance during January-August this year.

CANSI revealed that China is in a stable uptrend, however, still faces difficulties of newbuilding drought, being hard to make on-time deliveries and so on.

During Jan-Aug, China's newbuilding delivery increased to 43.16m dwt by 6.9% on the same period last year. However, on-time delivery seems to be difficult for Chinese yards, having delivered 4.7m dwt of newbuilding in August, down by 9% from the same period 2010.

Meanwhile, newbuilding order declined by 36.9% to 28.07 dwt from January to August and down 60% to 4.49m dwt new order in August.

China, about 40% of its shipbuilders being in a trouble with no fresh newbuilding order, its orderbook keeps dropping with larger deliveries than new orders.

As of Aug end, Chinese combined orderbook stood at 175.78m dwt, down by 9.4% from a year earlier and down 10.3% from the end of 2010.

In Jan-Aug period, overall production value of 1,526 shipbuilding-related companies grew 25.3% to CNY 506.4bn ($79.1bn). That includes CNY 393.1bn from shipbuilding industry, CNY 58.7bn from marine equipment industry and CNY 49.6bn from repair and scrap, each increased by 25.8%, 32% and 14.1% on the same period last year.

China's newbuilding export also showed its steady growth. During the same period, newbuilding export secured 84.4% of newbuilding delivery with 36.43m dwt, new order for export took 76.5% of total new order amounting 21.47m dwt and backlog for export ship was about 147.3m dwt, 83.8% of total orderbook.


Published : October 5, 2011

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BWTS enforcement 'near at hand'

The ballast water convention has finally been ratified by 30 member states of the International Maritime Organization.

It now needs only one more state to ratify before it comes into force.

The convention requires a minimum 30 states representing a minimum 35% of the global fleet to have ratified it in order for it to come into force a year later.

It has now been ratified by landlocked Mongolia and the Pacific island state of Palau, but neither has a significant percentage of the world’s tonnage, so the convention will need at least one more flag state representing 8.6% of the world fleet for both convention requirements to be met.

It is widely expected that a major flag such as Panama could be poised to sign up to the convention.

The convention could be in force by the end of next year, which will then put pressure on shipowners with certain ship types to have ballast water treatment systems installed.


Published : October 5, 2011

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Big3 orders fast-sailing

South Korea's Hyundai Heavy Industries, Samsung Heavy Industries, Daewoo Shipbuilding & Marine Engineering have secured $17.1bn, $14.8bn and $10bn each of newbuilding order for shipbuilding & offshore plant division year to date.

Hyundai and Hyundai Samho Heavy Industries in total, with yearly newbuilding target of $19.8bn, already booked a total of 79 vessels, including 10 drillships, eight LNG carriers, two LNG-FSRUs, and others amounting to $17.1bn.

Officials from Hyundai said, "With further optional newbuildings for three drillships, four LNG carriers and more are remaining, Hyundai would easily achieve target this year."

Samsung, having already exceeded target of $11.5bn, attained overall 49 ships of $14.8bn, which includes 10 drillships, 17 LNG carriers, one LNG-FSRU, etc.

Samsung said, "We have overly achieved newbuilding target already and is covered for three years. So we plan to be more selective for high-value newbuildings in the last quarter this year."

Daewoo has won a total of 42 ships, $10.04bn new orders by Q3 and inked 20 of the world-largest 18,000-teu boxships, in particular.
Daewoo is seemed to win an easy victory, with remaining options for four LNG carriers, four drillships and so on. Also, Indonesian submarine project in progress, valued at $1.1bn, three vessels, is reportedly to be sealed by Daewoo. Besides, $1.3bn of offshore platform new order, letter of intent being signed last year, is known to be close at hand, as well. In case of Daewoo, how far it will exceed the target would be more interesting.

Meanwhile, STX Offshore & Shipbuilding, including STX Europe and STX Dalian, secured 45 vessels totalling $3.55bn, which excludes recently won newbuilding cruiseship, just 27.3% of $12.8bn target.

An official from STX said, "Several new order for ultra-large boxship and other types are under discussion with shipowners. As STX Europe currently inked large cruiseship, additional new orders are expected in this field. We will put all our efforts to achieve the target."

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China private yards rise

A total of four shipbuilders, two state-owned and two private ones, are included in China's Top 500 Companies.

Private shipyards are raising their name, for instance, Yangzijiang Shipbuilding ranked higher than state-owned Shanghai Waigaoqiao Shipbuilding (SWS), Jinhai Heavy Industry placed in Top 500 Manufacturing Companies for the first time in private yards.

Recent rankings are announced every year by China Enterprise Confederation and Chinese Entrepreneur Association, 500-company listed in terms of revenue.

The highest ranked shipbuilding related company is China Shipbuilding Industry Corporation (CSIC), placed 61st with CNY 142.5bn ($22.2bn) down from last year. Meanwhile, China State Shipbuilding Corporation (CSSC) was counted by affiliated company and SWS took 379th place with CNY 20.1bn of turnover.

Yangzijiang Shipbuilding and New Century Shipbuilding got in to Top 500, followed by last year.

Published : September 30, 2011

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NK pens big BWTS orders

Marine equipment manufacturer NK of South Korea announced on September 29th that it concluded new contract for ballast water treatment system to be equipped on three VLOCs now under newbuilding from Dalian COSCO Shipbuilding Industry in China, after it recently booked BWTS for VLCCs under construction at Hyundai Heavy Industries.

Latest booked BWTS 'NK-O3 400' is NK's largest BWTS product, with delivery by the first half of 2012 and price tag of about KRW 2bn ($1.7m) apiece.

The shipowner customer is a major Japanese shipping company, having contracted with NK for BWTS for BC, LNG carrier, VLOC. Also, additional new order is prospected in this year.

Published : September 30, 2011

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