South Korea’s shipbuilders secured the largest number of new vessel orders globally during January-June this year, accounting for 45.5% of all orders won worldwide and beating their Chinese rivals, Korea’s Ministry of Trade, Industry and Energy (MOTIE) said on July 6.
During the first six months of this year, the Korean yards landed orders equivalent to 9.79 million compensated gross tons (CGTs), MOTIE said, quoting data from UK-based information provider Clarkson Research Services. South Korea also outpaced China, which took 43% of global orders, equivalent to 9.35 million CGTs, to retain the top spot for the first time in four years.
The ministry attributed the result to South Korea’s competitiveness in the field for liquefied natural gas (LNG) carriers and very large crude carriers, Yonhap newsagency noted.
“The country secured 62.1% of the world’s total orders for high-priced vessels, as it won 63 of the 89 orders placed for LNG carriers, and 26 of the 60 orders for container ships,” Yonhap noted.
The dominance on high-end vessels on their order books is helping to lift the profitability of Korean shipbuilders, too. The price of a 174,000-cubic-meter LNG carrier was $186 million two years ago, according to a report in Business Korea magazine, but as of June, the price had soared to $231 million, up 24%.
The surge in demand accounts for some of the price increase, but the shipbuilders are also trying to recoup higher input costs such as those for ship plate when quoting for new vessels, Mysteel Global noted.
Usually, steel plate prices account for about 20% of the shipbuilding cost but over the one-year period from the first half of last year, steel plate prices have increased three times, Business Korea noted. Currently, they are priced at Won 1.2 million/tonne ($914/t), nearly twice the level of last year.
The jump in costs is also causing headaches for the Korean yards and their customers. In a regulatory filing on Wednesday, Korea Shipbuilding & Offshore Engineering Co. (KSOE), said it had replaced existing contracts for LNG carriers it won early last year with new ones with a higher price tag amid supply chain disruptions and higher raw material costs.
KSOE said that with the buyer’s consent, it had agreed to a Won 314.1 billion contract with an Oceanian-registered shipper to build a LNG carrier, a replacement of the original Won 198.9 billion order it had secured from a Liberian-registered shipping firm in January 2021.
The builder has also substituted a Won 420.7 billion order for two LNG vessels for the Liberian shipper with a new Won 628.2 billion contract with the Oceanian shipping line.
“KSOE cancelled the original contracts in line with an agreement with the Liberian shipper and signed new deals, due to a disrupted supply of key parts,” Yonhap quotes the builder as saying.
Hyundai Samho Heavy Industries, a KSOE affiliate, will build the LNG carriers and deliver them in August 2023 and in August 2024, respectively.
Written by Russ McCulloch, russ.mcculloch@@mysteel.com
Note: This article has been published in accordance with an article exchange agreement between Mysteel Global and SteelMint.
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