비지니스코리아 Michael Herh (pr@businesskorea.co.kr)
HD HHI and Hanwha Ocean have mapped out plans to reduce the proportion of merchant ship orders this year and focus on the naval vessel business in 2024.
On Jan. 3, HD HHI set a US$988 million order target for its specialty ship (naval vessel) business, which includes surface ships and submarines, this year. Although there is a base effect from missing Ulsan-class frigate Batch-III 5 and 6 orders, the target is 615% higher than last year’s order value.
HD HHI shrank its business targets in the merchant ship and offshore plant sectors. The company has planned to post about US$5.2 billion in merchant ship orders in 2024. That is a drop of more than 50% from last year. The offshore plant goal is also down 25% to US$1 billion.
It is interesting to note that both companies either lowered their order targets or did not announce any plans in the merchant ship business. The shift of their focuses from merchant ships to naval vessels is a sign of fast changes in the domestic and international shipbuilding industries.
Cumulative global ship orders through November last year were down 20% year-on-year to 38.09 million compensated gross tonnage (CGT), according to Clarkson Research. Korea’s order intake fell 41% compared to China’s 5% decline over the same period. The global market has seen a decline in merchant ship orders and Korean shipyards have been unable to expand their production capacities, resulting in three to four years’ work to do.
With merchant ship docks full, Korean shipyards are turning to specialty vessels. Geopolitical conflicts around the world are also playing a role. A trend toward unmanned and automated ships is also increasing their value. The Korean Navy’s KDDX project will begin this year. It will start the project for a 6000-ton Aegis ship by the end of 2030. A total of six ships will be ordered with an estimated order value of 7.8 trillion won. They are also interested in Canadian, Polish, and Philippine submarine projects that will become visible starting this year. The lucrative Canadian submarine project is estimated by local and foreign media to be worth 60 trillion won.
“The cost of building submarines has exploded recently, and submarine prices are also on the uptick,” explained an official of the Korean defense industry. “The performances of combat systems for battle ships are also improving, and the trend of unmanned submarines is expanding the added value of building submarines.”