China's two largest dockyards, namely China CSSC Holdings Ltd. (CSSC) and China Shipbuilding Industry Corp. (CSIC) are considering to merge. After this development, China's four largest shipbuilders are also considering a merger.
Local media report that such mergers are concerning South Korean firms, while they are expected to have a positive effect on China’s review of the Hyundai Heavy and DSME merger proposal.
However, China will find it difficult to stand against the merger between the two Korean companies,because of the fact that similar mergers are promoted by its own shipbuilders. Nevertheless, some expect the contract prices of South Korean shipbuilders to grow, due to a big technology gap between South Korean and Chinese companies.
What is more, these could prove to be a serious threat to South Korean mid-size shipbuilding companies, which have already lost the majority of the bulk carrier orders to Chinese shipyards. Now, South Korea oil tanker market is now under threat.
As a matter of fact, sources report that Greek shipowners have placed several oil tanker orders on Chinese dockyards, which are offering a 5% to 10% lower price than South Korean firms.