Wednesday, November 7, 2012

[Ship Building] Strong Won speeds up order

Strong Won speeds up order

In case that recently strong won continues, Korean shipbuilders will book more new orders.

Analyst Park Mu-Hyun of E*Trade Securities said on November 5, "Despite quite a plenty of newbuilding demand, Korean shipbuilders hesitate to pen on the contract as shipowners keep demanding cut in newbuilding prices."

He explained "But when won currency becomes stronger, shipowners have no grounds to ask price reduction with declined foreign-exchange profits. Therefore, they usually rush into placing orders before exchange rates drop further."

He added that strong won tends to get even stronger after new order increases and shipbuilders' earnings fluctuate only limitedly through currency hedging.

Recently won-dollar exchange rate dropped below KRW 1,100.

Park forecasted that strong won will maintain for some time due to weak UDS, YEN and EURO and strong won would speed up new order activities in various ship types/sizes.

As Scorpio Tankers has revealed related data from operation of eco-design MR tankers (2012 delivered), "CSAV, Seaspan and Yang Ming announced their plans to order newbuildings, just as they have been waiting."

Therefore, he added that new order for commercial ship is possibly to increase from early of next year, mainly for medium-sized ships.

Published : November 6, 2012

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