HD Hyundai and Hanwha Clash Again in the 17 Trillion Ship Engine Market

HD Korea Shipbuilding & Marine Acquires STX Heavy Industries
Hanwha Signs Final Contract to Acquire HSD Engine
"More Expensive Eco-Friendly Engines... Fierce Competition"

HD Korea Shipbuilding & Offshore Engineering is acquiring STX Heavy Industries. With HD Hyundai acquiring STX Heavy Industries, the world's third-largest ship engine market player, and HSD Engine, the second-largest, being acquired by Hanwha Group, the market competition between HD Hyundai and Hanwha is intensifying.

HD Korea Shipbuilding & Offshore Engineering signed the main contract to acquire STX Heavy Industries with domestic private equity firm Pine Tree Partners on the 31st of last month. HD Korea Shipbuilding & Offshore Engineering will purchase 6,524,174 shares held by Pine Tree Partners and 5,364,670 new shares issued through a third-party allotment, securing a 35% stake in STX Heavy Industries. The total transaction amount is 81.3 billion KRW.

STX Heavy Industries has signed five ship engine supply contracts this year alone. These contracts were made with Chinese shipbuilders, K Shipbuilding, and Daehan Shipbuilding. The cumulative order amount this year is 142.6 billion KRW, which accounts for 79.5% of last year's sales.

LNG carrier built by HD Hyundai Heavy Industries
[Photo by HD Korea Shipbuilding & Offshore Engineering]

This acquisition will allow HD Hyundai to complete its portfolio of medium and large engines. STX Heavy Industries achieved a world record in 2011 by producing a cumulative total of 15 million horsepower and 1,000 units of large engines in the shortest time. It also domestically produced the 51/60DF dual-fuel engine, which is installed on liquefied natural gas (LNG) carriers, for the first time. A representative from HD Korea Shipbuilding & Offshore Engineering stated, "Through the acquisition of STX Heavy Industries, which has large engine production capabilities, we will diversify the spectrum of large engines."

With the International Maritime Organization (IMO) strengthening regulations on ship greenhouse gas emissions, the engine market, which is key to eco-friendly ships, is expected to continue growing. Market research firm MarketsandMarkets predicts that the global ship engine market size will reach 13.3 billion USD (approximately 17 trillion KRW) by 2027. Engines account for about 10% of the ship price. The price of LNG dual-fuel propulsion engines is about 15% higher than bunker oil combustion engines.

STX Heavy Industries employees posing for a commemorative photo after successfully conducting the world's first LPG dual-fuel engine test run in December 2019. [Photo by STX Heavy Industries]

Earlier, Hanwha Group acquired HSD Engine, a medium and large engine manufacturer, following Daewoo Shipbuilding & Marine Engineering (now Hanwha Ocean). In February, Hanwha Impact signed a memorandum of understanding to acquire a 33% stake (226.9 billion KRW) in HSD Engine, and the main contract was signed on the 6th of last month. HSD Engine is also accelerating the development of eco-friendly ship engines, including investing in methanol dual-fuel engine production facilities.

Professor Janghyun Lee of Inha University said, "Hanwha Ocean now owns the engine business, which takes several months to manufacture, enabling timely delivery of ships and quick response to changes during the construction process." He added, "HD Hyundai Heavy Industries has strengths in medium and large engines, and STX Heavy Industries excels in large engines, so although some businesses overlap, after the acquisition, HD Hyundai will own the entire engine business," and said, "Competition in eco-friendly engines will intensify going forward."

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