‘Cliff’ of Contracts
It has been found that South Korean construction companies won international contracts worth US$15.4 billion in total between the beginning of this year and July 20. This amount is over US$10 billion less than that recorded during the same period of last year.
Things are much worse in the South Korean shipbuilding industry, where overseas business accounts for more than 90% of the total sales. The top three in the industry, that is, Hyundai Heavy Industries, Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering, received orders worth a total of merely US$1.9 billion in the first half of this year. For reference, the amount had reached US$48.6 billion in 2013.
The current situation is unlikely to get better in the near future. In general, offshore plant construction projects can be underway when the international oil price is at US$60 per barrel at the least. However, the price is showing no signs of recovery at all and their offshore plant construction contracts signed two to three years ago are being cancelled one after another these days.
The merchant ship market is contracting at a rapid pace in the wake of Brexit, too. In this market, European shipping companies, which account for more than half of new orders, are looking to stop placing orders.