Friday, December 9, 2011

25 drillship orders expected

In 2012, newbuilding drillship would be contracted as about the same as this year's 27 vessels.

Analyst Park Mu-Hyun from E*TRADE Securities of South Korea recently forecast that about 25 drillships or $15bn of new order would be placed next year, among which Korean Big3 being expected to win 90% of 23 vessels, $13.5bn.

Ordinarily, it takes 3-4 years from oil exploration to production. As E&P investment sharply decreased in 2009 on account of global economic crisis in previous year, energy projects by oil majors should be expanded to maintain previous output. Therefore, investment on existing on-land oil field and new sub-sea fields are expected to continue.

Drillship market having firstly developed by Korean builders, Korean Big3, Hyundai Heavy Industries, Samsung HI and Daewoo Shipbuilding & Marine Engineering, would seal public tenders for project new order, except that oil majors place new orders at their domestic yards, Brazil's Petrobras, for instance.

Published : December 9, 2011


Samsung to win $12bn

Samsung Heavy Industries of South Korea seems to keep its new order momentum in LNG carrier, drillship and other sectors in 2012, while shipbuilding market worsens.

Analyst Jeon Yong-Bum, Solomon Investment & Securities said on 8 December, "As one of Korea's Big 3 builders, Samsung is expected to maintain its high level orderbook and improve its business performance next year."

Analyst Jeon added "The Geojae-based yard would be able to secure over $12bn of new order next year thanks to its prominent stance and specialization in LNG carrier and drillship sectors."

Published : December 9, 2011


Thursday, December 8, 2011

Year-end order surge

Getting real closer to the end of 2011, final newbuildings for the year are being contracted one after another including options signed earier this year being exercised.

According to Clarksons, even though there have been only few new order inquiries, quite a number of newbuildings in varied types were contracted last week, good news to builders striving for meeting their new order target.

Shanghai Waigaoqiao Shipbuilding of China recently inked two optional newbuilding 206,000-dwt capesize bulkers, valued at $53m per vessel, from Polembros of Greece with delivery by late 2013 and early 2014. it seems recovering shipping market for capesize bulker is somewhat in relation to SWS' new order.

Jinhai Heavy Industry also booked 1+1 newbuilding 64,000-dwt bulkers from Kyma of Greece, $28m a ship to be delivered in early 2014. Guangzhou Shipyard International secured an order for four 37,500-dwt product carriers.

Moreover, Hyundai Samho Heavy Industries of South Korea is said to have contracted additional two 164,000-cbm LNG carriers from Maran Gas of Greece while STX OSV penned one specialized offshore research vessel from Norwegian owner.

Meanwhile, in the offshore sector, Yantai CIMC Raffles Shipyard successfully sealed a newbuilding deal with COSL for one more deep-sea semi-submersible rig. Also, Swire Pacific placed a new order at Universal Shipbuilding of Japan for four platform support vessels.


Sungdong going-concern value "Bigger"

Sungdong Shipbuilding & Marine Engineering has bigger going-concern value than liquidation value, according to Deloitte Anjin, an accounting firm.

Deloitte Anjin had conducted a due diligence based on the end of September. Sungdong's creditor group said that Deloitte Anjin evaluated estimate of about KRW 1.9trn ($5.25bn), if creditors keep the management with additional financing while about KRW 1.3trn is expected when they wind up the South Korean yard.

However, according to Samjong KPMG, completed due diligence in terms of financial standing on the end of June, Sungdong's liquidation value is larger than going-concern value. Samjong reported that if KRW 1trn-1.5trn are additionally financed, the yard would likely to survive.

Recently, creditor group, including the Export-Import Bank of Korea Woori Bank, Shinhan Bank, etc., had a meeting to discuss which result to lean on. One creditor said, "As there is big gap between two results from different accounting firms, many suggested that more data be supported."

Only that Kookmin Bank, one of the other main creditor banks, is known to maintain its stance on backing out of financing Sungdong. Also, Kookmin did not attend the meeting.


Rolls-Royce secures PSV order

Rolls-Royce has secured an order to design and equip two offshore supply vessels for shipowner Gulf Offshore North Sea. The value of the contract to Rolls-Royce is approximately £10 million.

The two UT755 XL designs will be built at the Rosetti Marino SpA shipyard in Ravenna, Italy, with expected delivery in 2013 and 2014.

In addition to the design, Rolls-Royce will provide a propulsion system for each vessel including propellers and thrusters, along with deck machinery, bulk handling equipment and a ship automation package.

Hans Robert Almestad, Rolls-Royce, General Manager - Regional Sales, said: "We are pleased that Gulf Offshore North Sea has chosen to add additional Rolls-Royce vessels to their fleet. This demonstrates their continued trust in our industry leading marine technology. It is a pleasure to once again do business with such a large and important company in the offshore industry."

The Rolls-Royce UT 755 series is the world's most popular platform supply vessel, with more than 170 on order or in service. This best selling design delivers low fuel consumption, low noise and vibration, excellent load capacity and versatility.

Gulf Offshore North Sea is also the operator of eight UT 755s, which were all built at Rosetti Marino SpA. The contract also includes an option to build an additional vessel of the same design.

When this order is delivered, Rosetti Marino SpA will have constructed 10 Rolls-Royce UT vessels.


Wednesday, December 7, 2011

Korea tops new order

South Korea has practically ranked top in new order in 2011, retaking it from China in previous month.

According to Clarksons, Korean builders contracted 15 vessels of 655,515 cgt in November, while Chinese yards won 43 ships of 546,237 cgt.

Korea, having maintained the first place in new order since February, fell back to the second place in October with 370,000 cgt by China with 710,000 cgt.

Korea already exceeds total new order of 2010, 12.9m cgt with 339 vessels of 13.25m cgt in the first 11 months. It recorded the largest order of 32.6m cgt in 2007, then sharply decreased to 4.5m cgt in 2009 by financial crisis in the end of 2008 but has been in recovery from last year.

On the other hand, China recorded less than half of 19.08m-cgt last year with 463 vessels of 8.66m cgt, during January to November. It secured the biggest new order of 32.4m cgt in 2007, then rapidly dropped to 7.5m cgt in 2009.

In terms of new order amount, Korea has won a total of $46.5bn while China took $15.3bn.

Meanwhile, China still takes the largest order in the book, about 39% of overall 6,195 vessels or 120.55m cgt as of 1 November with 2,694 ships of 47m cgt. Korea follows with 1,214 vessels, 39.19m cgt.

However, after this year, Korea would likely to turn around Chinese orderbook.

Meanwhile, projected worldly backlog this year would lower than 120m for the first time since May 2006.

Market sources said, "New order for commercial ship has been in a trouble this year and will be as well in 2012, however, as oil price is expected to keep in an uptrend next year, offshore plant and specialized ship market would be stable.


Korea-Japan Q4 steel price settled

South Korea's major shipbuilders have recently finalized price negotiation for Q4 thick steel plate with JFE of Japan with $770-780 per ton in terms of free on board (FOB).

Sources said that Korea also expected to seal the deal with Nippon Steel in a similar pricing with JFE.

One large shipbuilding player said, "Thick-plate price negotiation for the fourth quarter has been confirmed with Japanese steel makers, We will be supplied at lower price than Q3."

Korea's thick plate import price, used to be $750 per ton in Q1, has sharply increased to mid-$900 per ton in Q2 by catastrophe in Japan and rise in Korean steel price, then it is in a down trend from the third quarter due to over-supply and global economic depression.

Recently confirmed Japanese thick plate is about KRW 890,000-900,000 ($787.6-796.5) per ton, considering freight, exchange rate, etc, which is lower than Korean's local price by KRW 60,000 at most.

Domestic thick plate's standard price is around KRW 1.11m per ton, however, it is traded in early-to-mid KRW 900,000, in practice.

South Korea's major steel manufacturers are keeping their eye on this contract affecting Korean market.


Big3 to win $13bn: Offshore

In spite of troubled commercial ship market, South Korea's major 3 shipbuilders are expected to increase share prices thanks to new order for offshore production facility.

Analyst Yoo Jae-Hoon from Woori Investment & Securities said, "Big3, Hyundai Heavy Industries, Samsung HI and Daewoo Shipbuilding & Marine Engineering, would likely to win $12bn-13bn of new order in 2012 (respectively), which down by 16% on 2011. Also, if merchant ship sector makes a fast recovery, new order would grow by far."

Woori's Yoo added, "Of Big3's overall new order, offshore sector had just remained 36% during 2007-2010. However, they are now in progress of becoming offshore-specialized manufacturers, offshore sector taking 69% and 68% in 2011 and 2012 each."

He only pointed out that if European financial crisis worsens into tight money-market, order book would be at risk.

Yoo added, "Prolonged depression in shipping market would also cause liquidity problems to shipping companies. Further cancellation, postponement of delivery would restrict turn-around share prices of builders."

Also said, "Stabilization of Eurozone financial market is required, as well."


Korean future strategy

There will be a meeting to discuss mid- and long-term development for South Korea's shipbuilding and offshore industry.

The Korea Shipbuilders' Association (KOSHIPA) revealed that 'Seminar on Shipbuilding & Offshore industry Development' will be held on 7 December.

As Korea facing with China's challenges, changes in market environment, etc., KOSHIPA has been working hard to discuss strategies to overcome difficulties and analyze market situation.


Samsung, "Technology Leader"

Samsung Heavy Industries maximizes production efficiency through increased automization, while concentrating on such high-value ships as drillship, LNG carrier, etc.

Also, Samsung is working on technical development for eco-friendly energy-efficient vessel and enhance its technology.

The South Korean builder uses its self-developed intelligent robots to improve quality of vessels and safety, for instance, Spider Robot welds cargo freight of LNG carrier holding.

Inside-pipe inspection for LNG carrier, installment of automatic cold insulation material and other robots are working in the field.

Meanwhile, the Geojae-based yard already installed 400-meter long of the world largest hauling water tank and secured a site in Pangyo to construct R&D center by 2013.

Samsung said, "Patent application rate has grown big by such hard efforts in technological development and 1,099 cases of patents in 2010 were larger 20-30% than other builders."


China plate output rises

China has produced 13.45 million tonnes of ship plate in the first three quarters of this year, up 2.97% year on year.

High-strength ship plate output was 6.04 million tonnes, down 3.18 percent compared with the same period last year.

China's ship plate production for September was 1.45 million tonnes, up 4.58 percent over a year earlier; high-strength ship plate output was 576,100 tonnes, down 8.8 percent.

9 Chinese steelmakers had a ship plate production of more than 500,000 tonnes in the first nine months of this year and 7 posted a high-strength ship plate output of exceeding 300,000 tonnes.

The increase in ship plate production shall be attributed to the shipbuilding capacity expansion. China's accomplished shipbuilding output came to 51.01 million DWT in the first three quarters of this year, up 18.3 percent from a year ago.

China's demand for high-strength ship plate from shipbuilding industry maintains stable growth in 2011. Therefore, Chinese steelmakers are suggested to adjust product mix and improve quality of high-strength ship plate to meet the demand of domestic shipbuilding industry.


Big3 hoard orders

Despite shrinking ship financing and tonnage overcapacity, South Korea's Big3 are expected to continue new order momentum.

Analyst Yoo Jae-Hoon from Woori Investment & Securities said on 2 December, "Overall new order for merchant ship in 2012 is projected to be 25m cgt, down by 14% on 2011, due to Eurozone financial crisis.

Major 3 builders, Hyundai Heavy Industries, Samsung HI and Daewoo Shipbuilding & Marine Engineering, would have momentums in their share prices because of their contracts for offshore production facilities."

Yoo added, "Stabilization of European financing market would unburden risks on order book and boost shipbuilders' share prices. To focus on Big3 with new order momentum by the first quarter next year is suggested."


Russia builds diesel icebreakers

Russia will build four diesel icebreakers worth a total of 19.5 billion rubles ($640 million), a federal agency said on Friday.

Under the contract, signed by the Federal Agency for Maritime and River Transport (Rosmorrechflot), the Rosmorport federal unitary enterprise and the United Shipbuilding Corporation, the first, 25 MW icebreaker will be built in May 2015 and the other three (16 MW) in October 2015.

One of the ships will be built at the Vyborg shipyard and the others at the Baltic shipyard.


Chinese to ride wave

Pressed by the difficult market conditions, China plans to enhance the competitiveness of its shipbuilding industry by developing a handful of major players, said Guo Yanyan, a senior official at the Ministry of Industry and Information Technology (MIIT).

The government will further consolidate the sector by encouraging mergers and acquisitions and reorganization among Chinese shipbuilders, said Guo, at the Senior Maritime Forum of the 2011 International Maritime Conference in Shanghai on Tuesday.

"We will strive to foster more than five Chinese shipbuilders so they will be among the world's top 10 (in terms of production capacity) by the end of 2015," he said.

According to the plan, industrial consolidation will see China's 10 biggest shipbuilders account for more than 70 percent of the country's domestic shipbuilding production. Small and medium-sized companies will be encouraged to develop specialized shipbuilding techniques, Guo added.

The weak recovery of the global economy has resulted in a depressed market for shipbuilders this year. The number of orders for new vessels at Chinese shipyards - particularly for tankers and bulk-carriers - has been much lower than in 2010, said Zhang Shengkun, the president of the Shanghai Society of Naval Architects and Marine Engineers.

"With their technological advantages, South Korean shipbuilders can manufacture vessels with more added-value. Chinese shipbuilders have not paid enough attention to their product structure and are facing a serious problem of overcapacity in the market," said Zhang at the forum.

Guo said Chinese shipbuilders should strive to develop their technology to meet demand in the international market.

"Most Chinese shipbuilders produce bulk-cargo ships as their major product. To tap into the global market, it is time to develop the technologies to make vessels with more added-value, such as container vessels, liquefied-natural-gas carriers and drilling ships," said Guo.

Another emerging market for Chinese shipbuilders is the oceanographic engineering equipment industry, said Guo, citing the government's 12th Five-Year Plan (2011-2015).

"China's sales revenue from oceanographic engineering equipment is expected to exceed 200 billion yuan ($31 billion) this year, and the country's market share for equipment used in the detection of oceanic oil and gas is targeted to reach 20 percent in five year's time," said Guo.

In 2010, China's accomplished shipbuilding output exceeded a total deadweight tonnage of 60 million tons for the first time, a fivefold increase from 2005. By the end of the third quarter of this year, the accomplished shipbuilding output exceeded a total deadweight tonnage of 51 million tons.