'Price, Cargo Volume, Biden'... Will the 3 Major Tailwinds Boost the Shipbuilding Industry Next Year?

Since the shipbuilding industry ranked first in annual orders in 2011, it fell to second place behind China for six consecutive years from 2012 to 2017. However, from January to November this year, it secured 10.9 million CGT (Compensated Gross Tonnage), accounting for 42% of the global ship orders totaling 26 million CGT, signaling a turnaround in the shipbuilding industry. Next year is a more important time than ever for the shipbuilding sector, which has found an opportunity after a crisis. This is because the order performance in the second half of this year and last year presents a chance to escape the shadow of the recession. We hope that the boom in the shipbuilding industry in 2019 will serve as a driving force for South Korea's economic growth. Photo by Kang Jin-hyung shows workers starting their work with the rising sun at the LNG shipyard of Daewoo Shipbuilding & Marine Engineering in Okpo, Geoje, Gyeongnam.

[Asia Economy Reporter Park So-yeon] The outlook for the shipbuilding industry next year, boosted by three major factors?'price,' 'cargo volume,' and 'Joe Biden'?is expected to be favorable. In particular, orders for domestic shipbuilders have surged sharply since September.

According to the 2021 global new ship order volume and Korea's order volume forecast by the Korea Eximbank Overseas Economic Research Institute on the 19th, the global order volume next year is expected to increase by 111% compared to the previous year, reaching 30 million CGT. Of this, Korea's order volume is projected to rise by 127% year-on-year to 10 million CGT, amounting to approximately $22.5 billion (about 25 trillion KRW).

Since the new global shipbuilding orders are driven by demand to comply with environmental regulations, especially greenhouse gas emission regulations, Korean shipbuilders, who have competitiveness in eco-friendly vessels, are in a favorable position. It is expected that higher-priced ships emphasizing efficiency and performance rather than price competitiveness will sell more.

In particular, with U.S. President-elect Joe Biden pledging to rejoin the Paris Climate Agreement, it is anticipated that most of the 30,000 secondhand ships worldwide will be replaced with LNG-powered vessels over the next decade.

Along with this, the recovery of the shipping industry, a leading indicator of shipbuilding, is also considered a positive factor. Due to the early economic recovery in some regions centered on China, cargo volume is increasing, causing a 'ship shortage' phenomenon.

Already, the domestic 'Big 3' companies are sweeping up major global orders. Korea Shipbuilding & Offshore Engineering, the shipbuilding holding company of Hyundai Heavy Industries Group, has secured orders for a total of 26 vessels worth $2.2 billion since September this year, including 18 ultra-large crude carriers (VLCC), 3 liquefied petroleum gas (LPG) carriers, 3 petrochemical product carriers (PC ships), and 2 liquefied natural gas (LNG) carriers. This accounts for about 35% of this year's total order amount of $6.3 billion achieved in just the past two months. Daewoo Shipbuilding & Marine Engineering also signed contracts for six high value-added icebreaking LNG carriers and six container ships since September, achieving a total order volume of $2.4 billion.

This content was produced with the assistance of AI translation services.