Korea Shipbuilding & Offshore Engineering Secures $3.2 Billion in Orders Over Ten Days at Year-End

[Asia Economy Reporter Park So-yeon] Korea Shipbuilding & Offshore Engineering, the shipbuilding holding company of Hyundai Heavy Industries Group, is gaining attention for its year-end order rally. Not only are there numerous ongoing order projects under discussion, but with the revival of global shipowners' ordering sentiment, additional orders are expected to continue into the new year.

According to industry sources on the 29th, Korea Shipbuilding & Offshore Engineering signed multiple shipbuilding contracts with various shipping companies over ten days from the 14th to the 24th of this month, including 13 LNG carriers out of a total of 22 vessels. The orders also included 4 ultra-large container ships, 2 ultra-large crude oil carriers, 2 medium-sized LPG carriers, and 1 small PC vessel. It is notable that the orders were evenly distributed across various ship types rather than concentrated in a specific category. The order volume of LNG carriers, which are high value-added vessels, alone amounts to approximately 2.4 billion dollars, making this order rush by Korea Shipbuilding & Offshore Engineering even more positive.

LNG carriers are high-priced vessels with an average price of 186 million dollars (based on 174,000 cubic meters / 206 billion KRW). While they are highly profitable, they require advanced construction technology, making this a field where Korean shipbuilders hold unrivaled competitiveness. Korea Shipbuilding & Offshore Engineering's total ship order value in December rose from about 1.9 billion dollars in 2017 to nearly double this year at approximately 3.6 billion dollars. The shipbuilding industry analyzes that the year-end order rally will continue into next year due to the business cycle. Especially considering that LNG is gaining attention as an eco-friendly fuel replacing coal and oil, and that Qatar has reserved construction slots for about 100 LNG carriers with Korea's 'Big 3' shipbuilders, the order outlook is favorable.

Orders for ultra-large container ships, an area of strength for Korea Shipbuilding & Offshore Engineering, are also expected to increase due to the sharp rise in freight rates, acting as a positive factor. According to Clarkson Research, a ship and shipping market analysis firm, container ship orders were sluggish this year due to the impact of COVID-19 reducing cargo volumes, but have rapidly recovered since the second half of the year. Large container ship orders are resuming one after another amid the shipping boom. The number of orders is projected to increase by more than 70%, from 109 vessels this year to 187 vessels next year.

It is also welcome news that demand for ultra-large crude oil carriers (VLCC) equipped with LNG propulsion engines, in which domestic companies have strengths, is increasing due to the strengthened International Maritime Organization (IMO) environmental regulations from this year, replacing bunker C fuel oil. Globally, a total of 42 VLCCs were ordered this year, with Korea Shipbuilding & Offshore Engineering securing 27 of them. Korea's market share stands at 81%. Notably, Korea Shipbuilding & Offshore Engineering alone secured more than half of the global VLCC orders.

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