Friday, October 14, 2011

Daewoo & Samsung wins LNG carriers

South Korean shipbuilding majors Daewoo and Samsung are poised to win a pair of LNG carrier newbuildings respectively.

Swedish shipowner Stena Bulk is soon to order a quartet of LNG carrier newbuildings worth an estimated $870m.

Industry sources say the company has been in “deep and final” contract negotiations with both Daewoo Shipbuilding & Marine Engineering (DSME) and Samsung Heavy Industries this week that will see it proceed with four newbuilding orders.

Stena is expected to ink two 174,000-cbm vessels at DSME early next week and also contract another two 160,000-cbm ships at Samsung.

Agreed delivery dates will see each yard deliver one ship in 2014 and another in 2015. Brokers suggest the larger vessels will be priced in the region of $220m each.

Published : October 14, 2011


Korean yards "Invest now!"

Regarding South Korean shipbuilding stocks, the present seems to be the most opportune to invest.

Analyst Seo Jung-Duk from MERITZ Securities said on October 13, "LNG-related and offshore plant markets, main target for Korean yards, being expected to be stable despite troubled shipbuilding financing and global financial crisis, current share prices of shipbuilders seem still attractive."

Seo added, "Shipbuilding stocks are good to invest at the bottom and sell over during the market boom. It is unsure to expect when global economy turns around, however, the price has already reached an attractive phase,"

Also, Seo said, "Shipbuilders' shares showed the biggest under-performance after May 2008 and the price has reached bottom similar to a valuation from global financial crisis in 2009 being afraid of troubling European shipbuilding financing. However, target market for Korean yards would not be so much affected by current depressing circumstances."

Published : October 14, 2011


China offshore plan coming up

Ministry of Industry and Information Technology of the People's Republic of China (MIIT) revealed that its mid- and long-term development plan for offshore facility building is just ahead of completion and to be announced in public by the end of this year.

A 10-year development plan for offshore facility industry is scheduled to proceed with 12th and 13th five-year development plans from 2011 to 2020.

The plan has already collected opinions of oil company, yards and Chinese government and now is under mediation with '12th five-year development for emerging industry.'

China's offshore-facility building industry has a market size of about CNY 30bn ($4.6bn), 7% of overall global market. There are yards for offshore facility building in several places, however, subsea facility related industry has no outstanding outcome yet.

The offshore facility industry development plan is to secure and develop subsea-related technology, floating oil/gas facility, floating wind-power facility, desalination, and others.


Published : October 13, 2011


Thursday, October 13, 2011

Korea returns to No. 1

South Korean shipbuilding industry, which has lost world's No. 1 position to China for the past two consecutive years, continued to win mega new orders this year and it seems quite certain that Korea will retake the top spot this year.

According to Clarksons, Korean shipbuilders secured $37.8bn orders by August compared to $10.3bn won by Chinese rivals during the same eight-month period.
Price competitive edge amid weak Korean won and technical prowess in energy efficient ship and ultra large containership enabled Korean large shipbuilding companies to win much more newbuilding orders this year.

Samsung Heavy Industries has scored 17 LNG carrier newbuilding orders among others this year and well over-achieved its annual order target of $11.5bn.

South Korean Big 3 shipbuilders are also developing new offshore markets and, especially, Samsung landed a $3bn LNG-FPSO contract from Royal Dutch Shell in May.

Meanwhile, FPSO conversion from old VLCC can be conducted by labor-intensive shipyards in China, and Korean shipbuilders are closely eyeing the fast growth of Chinese shipyards in technical terms.

Published : October 13, 2011

Focus on high-value

Competition in high-value ships market is getting fiercer among big 3 shipbuilding nations.

Worldwide newbuilding order shows the bottom in recent two years and yards are looking for offshore facility market at present, market player saying, "M&A or restructuring of yards is needed."

According to Chinese government's recent statistical data, about 40% of Chinese yards had won no new order year to date and overall newbuilding order dropped by 36% to 28.07m dwt during January to August period.

Its outstanding outcome to top in delivery, new order and orderbook last year was mainly due to its massive new order for small size boxship, bulkers, etc.

China's low-margin oriented business has been recently hit hard.

About 1,526 of shipbuilding-related companies in China are in a trouble due to increasing labor cost, yuan appreciation and tightened financing.

Under these difficult circumstances, major yards are groping to enter into high-value ship market. For instance, Yanzijiang Shipbuilding penned four China-first energy-efficient boxships from England, about 30% more efficient with a design by Dutch. Also, private-owned Rongsheng Heavy Industries had a training on LNG-carrier related technology from Gaztransport & Technigaz of France.

Published : October 13, 2011


Korea heavy-plate balance

South Korea's thick plate capacity has increased about 3,500,000t for a recent year and reached a demand-supply balance.

POSCO and Dongkuk Steel Mill completed expansion by 2m ton and 1.5m t each in the beginning of this year and now secure overall capacity of 7m t and 4.4m t, respectively. Including Hyundai-Steel's 1.5m ton, Korea major steel producers' capacity totals 12.9m t.

Market player said, "Korean domestic demand for thick plate last year was about 11m t, which seems to be balanced with this year's increased supply."

Recently Japanese steel makers conduct dumping sales for 20% of its total thick plate in Chinese price. As Japan has high-quality, Korea needs to improve technical skills to provide various high-grade thick plates to survive in a fiercer competition.

Published : October 12, 2011



Wednesday, October 12, 2011

China jumps to high-value

Chinese yards which used to compete with low-margin commercial ships have entered high-value vessel market, such as drilling rig, FPSO, cruiseship, LNG carrier, ultra-large boxships, etc.

China State Shipbuilding Corporation (CSSC) successfully inked the first drillship in China last month. CSSC-affiliated Shanghai Shipyard will design, procure and build the 2+2 drillships, new ordered by Reignwood group of China with delivery by the first quarter 2014.

This 'TIGER' drillships of 160m in length enable drilling up to under 10km from the surface and working in a water depth of maximum 5,000ft.

China Merchants Heavy Industry (CMHI) in Shenzhen has signed a newbuilding contract for 2+2 CJ46-X100-D jack-up rigs on September 29th with FEG of Singapore. CJ46 rig is able to drill under 350-feet water and China Oilfield Services Limited (COSL) already placed a new order and was delivered the same jack-up rig.

Also, Dalian Shipbuilding Industry Corporation in a consortium with Technip of France and China Offshore Oil Engineering Corporation (COOEC) is in a newbuilding order competition with South Korea's Hyundai Heavy Industries and Samsung HI on Nigeria's Egina FPSO project, amounting to $2bn.

Meanwhile, Wenzhou Sino-European Shipbuilding (SES) is known to be in a newbuilding consultation of four cruiseships, $700-800m apiece and Yangzijiang Shipbuilding booked a series of 10,000-teu ultra-large containerships from Seaspan of Canada.

Hudong-Zhonghua Shipbuilding made the first export order for four LNG carriers from Japan's MOL as well.

Chinese shipbuilders are entering high-value market, which used to be under Korea's dominance.

Regarding China's recent advances, Korean industry players see China would be no risk right at the moment with gaps in shipbuilding experiences and technology, however, is on its guard against fierce chasing by China in the long term.

Published : October 12, 2011


STX joins KOGAS LNG-fuel R&D

South Korea's STX Offshore & Shipbuilding and Korea Gas Corporation (KOGAS) signed a Memorandum of Understanding on 'Joint development for LNG bunkering system.'

This MOU is to be prepared for global emission control with applying LNG.

STX O&S and KOGAS are now under research and development for LNG bunkering system and a LNG-fueled ship.

Earlier this year South Korean big 3 shipbuilders, Hyundai, Samsung and Daewoo, also signed the same agreement with KOGAS.

Meanwhile, STX O&S is actively conducting research in LNG-related fields, having already developed ultra-large boxship fueled by LNG and LNG FuSion™, an LNG fuel supply system.

Published : October 12, 2011


National strategy for offshore

China revealed its 2011-2020 Offshore facility industry development strategy to support offshore facility industry by aiding issuing bonds or listing of offshore-facility yards.

Chinese government said offshore industry should be strategically promoted and developed.

Recent strategy includes to be prepared for design and technology for equipment and offshore facility construction by 2015 and to establish overall system covering R&D, supply, technical service, and others by 2020.

Researcher Yi Hai Wen from of China expects that Chinese strategy on offshore plant would expand its market share henceforward, to about 20% by 2015 with annual market size totalling CNY 12bn ($1.87bn) for the next five years.

Published : October 12, 2011


Tuesday, October 11, 2011

Samkang inks jack-up leg

Samkang M&T of South Korea revealed on October 10th that it has finalised a new order for offshore equipment from Europe.

Steel pipe manufacturer is to supply four ultra-large cylinder jack-up legs, 86m in length and 4.5m in caliber, valued at KRW 20bn ($17m). Delivery is due for the end of May 2012.

Published : October 10, 2011


Daewoo to win submarines

Daewoo Shipbuilding & Marine Engineering of South Korea sat around the table to finalize newbuilding contract for submarines with Indonesian Ministry of National Defense and the Navy.

This project is to newbuild three 1,400-dwt submarines totalling KRW 1.2trn ($1.1bn), which would be the Korean largest exporting amount in defense industry.

Daewoo and Indonesia plan to sign a final contract by November, after negotiation on detail contents.

It is also known to be under discussion on new orders for submarine and surface ship with governments in Central and South America and Southeast Asia.

Meanwhile, a Korean shipbuilder inked a total of 11 submarines, except for recent project.

Published : October 10, 2011


Restructuring Imminent

South Korea's shipbuilding industry worries over huge restructuring as a few major shipbuilders sweep new orders this year.

Before 2008, major shipbuilders' share on new order used to be lighter due to green yards' market entry. However, big yards with high technology are cornering the market, after global financial crisis.

Polarization of new order intake in times of economic recession would be a signal to show restructuring having been approached.

Market players forecast massive restructuring, such as M&A, weed out, etc., is unavoidable for yards around the world after the first half next year.

According to Clarksons, there was a decrease in orderbook for 10 major yards' share among 600 in the world from 40.8% in 2005 to 32.1% in December last year. However, global 10 big shipbuilders' market share has faced uptrend this year, up to 34.6% in the end of September.

It is the same story for the world big 30 yards. About 63.1% of overall backlog in 2005 bottomed out in 2009 with 51.2%, however, it has grown to 54.7% at the end of September 2011.

Industry player said, "Aside from top 30, smaller yards barely manage to feed themselves with new orders from three years ago. Backlogs are likely to start to be exhausted from the first half next year."

Published : October 11, 2011