Samsung Heavy Industries (SHI) and Hanwha Ocean, two of the three major Korean shipbuilders along with HD Korea Shipbuilding & Offshore Engineering (KSOE), are expected to fail to meet their annual order targets set earlier this year by the end of December.
According to sources in the shipbuilding industry on Dec. 25, SHI and Hanwha Ocean are in the final stages of their negotiations for the second LNG carrier project promoted by Qatar Energy, the state-owned energy company of Qatar, but may fail to land orders before the end of 2023.
While HD HHI signed a memorandum of understanding on building 17 vessels in October, SHI, Hanwha Ocean and Chinese shipbuilders are reportedly holding the final price negotiations for the remaining 20 vessels. Industry observers believe that even if the two Korean shipbuilders win additional orders in the remaining week, they are unlikely to achieve the targets that they set at the beginning of this year, as the orders are likely to be spread out.
Earlier this year, SHI and Hanwha Ocean set annual order targets of US$9.5 billion and US$6.98 billion, respectively. As of the end of November, they reached 69 percent and 43 percent of their goals with US$6.6 billion and US$3 billion respectively.
However, SHI has maintained the number one position in order backlogs among global shipyards this year, and Hanwha Ocean is faring well as it has won a series of specialty ship orders.
According to Clarkson Research, a U.K.-based shipbuilding and shipping market analyst, SHI’s Geoje Shipyard retained the top spot globally with an overall order book of 10.7 million CGT as of the end of November, despite a slowdown in orders this year. This was followed by HD Hyundai Heavy Industries’ Ulsan Shipyard with 10 million CGT and Hanwha Ocean’s Okpo Shipyard with 8 million CGT.
For Hanwha Ocean, this year was highlighted by increased orders in the defense sector. The company recently signed a contract with the Korean Defense Acquisition Program Administration to build the Jangbogo Submarine.
The contract is valued at 1.102 trillion won (US$848.5 million) and the company has also received orders for two 2021-model year lead ships which are currently under construction. In 2022, the company ordered only one specialty ship, but this year it has significantly increased its order volume to six ships.
“The news of the second contract in Qatar is taking longer than expected,” a shipbuilding industry insider said. “The negotiations are being prolonged as shipbuilders are not budging to raise ship prices as much as possible.”