News: A Gloomy Day for Companies | BusinessKorea

Sunday, January 21, 2018

Korea’s large shipbuilding companies are devoted to supplementing the slow performance so far in the large-scale marine drying plants
16 October 2009 - 12:46am

September 15 marked the 6th anniversary of Korea’s Day of Shipbuilding Industry, however, Korean shipbuilding companies have little to celebrate. The slowdown in shipbuilding and shipping industries from the latter half of 2008 continues and there are problems winning new shipbuilding orders. In addition, there is the Chinese presence offering cheaper services.

If this continues, the Korean shipbuilding industry is expected to fall behind its Chinese counterpart. According to Clarkson Research, a research firm specializing in shipbuilding and shipping markets, Korea won 56,520,000 CGT, or 34.4%, of shipbuilding orders, closely followed by China with 55,000,000 CGT or 33.4%, as of the end of August 2009. Japan was far behind with just 26,460,000 CGT, or 16.1%.

The difference between Korean and Chinese orders currently lies at only 1% and there are concerns that China may replace Korea as No.1. In new orders, China’s cheap service policy is beginning to pay off. Based on shipbuilding order records from January to August of this year, China won 2,110,000 CGT, 54.2% with Korea second with 1,220,000 CGT, 31.4%.

These two factors; reduced orders and China’s cheap price policy, have deteriorated the order environment. Korea’s shipbuilding companies do continue to win highly value-added orders, however, the frequency is decreasing.

Korean companies have reserved workloads for the next one or two years and the price of steel plates have fallen, leading analysts to predict a growth in operating profit in the third quarter. However, the problem is what happens after that. Many companies have failed to produce profits despite increases in the exchange rate and the price of steel.

Companies and stock analysts predict that shipbuilding-related finance will gradually improve only at the end of 2009 or early 2010. They say that we still need to closely monitor the market as long as effects from the global financial crisis remain.

Korea’s large shipbuilding companies are devoted to supplementing the slow performance so far in the large-scale marine drying plants. Samsung Heavy Industries Co., Ltd. won an order for a Liquefied Natural Gas-Floating Production Storage and Offloading Unit (LNG-FPSO) worth 50 billion dollars from European oil company Royal Dutch Shell in July 2009.

The Gorgon Project to develop a gas field off Australia’s northwest coast, the construction of a gas field in Myanmar, and a project in Russia’s Shtokman Bay are expected to invite bidders sometime during the latter half of 2009 and Korean companies are eager to win any and all of these. Brazil meanwhile is promoting construction of a large-scale marine plant, which is also of great interest to Korean companies.

For the two billion dollar LNG plant module for the Gorgon Project, Hyundai Heavy Industries, Samsung Heavy Industry, and Daewoo Shipbuilding & Marine Engineering are joining the competition. For the construction of a gas field in Myanmar, a project worth two billion dollars, Hyundai Heavy Industries and Samsung Heavy Industry are among those competing.

In the LNG Project in Shtokman Bay, the world’s largest gas field, 7-9 LNG ships are expected to be ordered, with Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering, Samsung Heavy Industry, as well as some Japanese companies all competing. Brazil’s marine plant construction has already invited bids from Hyundai Heavy Industries, Samsung Heavy Industry, Daewoo Shipbuilding & Marine Engineering, and STX Offshore & Shipbuilding.

Based on experiences in marine plants, shipping companies are actively winning various orders in the plant construction industry. Hyundai Heavy Industries is one such company that has obtained excellent results from the construction of plant facilities.

Chinese companies are expected to become more active based on their cheap price policies. Korean companies will need to make use of their strength in marine plants based on differentiation with highly value-added ships. Furthermore, they need to compete with Chinese companies based on competitiveness from technologies and prime cost reduction.

Categories: 

Copyright 2013 BusinessKorea Co., Ltd.
301 Samdo Building, 12-1
Yeoido-dong, Yeongdeungpo-gu
Seoul, Korea 150-010
Tel: +82-2-578-3220
Fax: +82-2-578-3224
Email: contact@businesskorea.co.kr

 
 

Web design by: