Korea has price competitiveness, technology and experience in LNG
Competition from China and Japan has hardly been a threat to Koreas surging shipbuilding sector so far this year. Many Korean shipbuilders are on pace to easily surpass their annual targets.
Hyundai Heavy Industries, the worlds largest shipbuilder, is leading the group with 44 ships and offshore plants in the books this year totaling about $11.7 billion, including the announcement yesterday that it had won a $1.1 billion order to build two drillships for Rowan Companies.
Having already clinched orders for nine drillships worth $5 billion – plus an option to build three more – Hyundai sits at the top among shipbuilders for the most drillship orders in the world. And with high-value deals such as liquid natural gas carriers and offshore plants, the company has already reached 60 percent of its $19.8 billion target for the year.
With continuously rising international oil prices recently, more investments are being made in resource development, said a Hyundai Heavy official. The interest in oil-field development is shifting offshore, and we believe that the increasing need for drillships will continue. Samsung Heavy Industries, the second largest shipbuilder in the world, is even further along in attaining its orders target this year.
A recent $3 billion order to build a LNG-FPSO (Floating, production, storage and offloading units) from Royal Dutch Shell, the worlds largest energy company, has pushed it to 91 percent of its 2011 target. It has added $10.5 billion in orders so far this year.
The third of Koreas big three, Daewoo Shipbuilding & Marine Engineering, is also well on its way to meeting its 2011 target. It has won 16 orders amounting to $4.3 billion so far this year. At this time last year, the company had only booked $1.6 billion in orders.
STX Offshore & Shipbuilding, which made a slow start to the first quarter, clinched a $550 million deal yesterday for two LNG carriers from Russia-based SCF Sovcomflot and four petroleum carriers from Denmark-based Norden Shipping. Officials are viewing the firms $5 billion target positively.
Momentum is positive as Korean shipbuilders lead in orders this year. Most orders are concentrated in LNG carriers and offshore plants, instead of small ships and bulk ships, for which competition is tight with the Chinese, said Yoo Sung-mo, an analyst at Shinhan Investment and Securities.
The technology and experience involved in LNG and offshore is something that Chinese companies cant compete with us on, and Korea has price competitiveness with the Japanese, Yoo added.
Yoo said Germanys decision to shut down all of its 17 nuclear reactors by 2022 will increase demand for LNG and orders for ships will increase, which he predicted will benefit Korean shipbuilders.
Yoo, however, predicted a slowdown in orders in the summer months.
He also said that container ship demand is not doing well, but he predicted demand will revive towards the end of this year and beginning of next year.
Source: Korea Joongang Daily