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Korean Shipbuilders Land 55% of Global Orders in May
Shipbuilders Still in Rough Sea
Korean Shipbuilders Land 55% of Global Orders in May
  • By Michael Herh
  • June 13, 2018, 10:43
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Korea reclaimed the top spot in global shipbuilding order receipts, but its shipbuilding industry has yet to come out of the protracted slump.

Korean shipbuilders recaptured the first place in global shipbuilding orders, outclassing Chinese shipbuilders in a month.

According to Clarkson Research, a shipbuilding and maritime survey agency, Korea topped the standings by landing 550,000 compensated gross tonnages (CGTs) for 15 vessels out of the total one million CGTs (35 vessels) ordered worldwide in June. China placed second with 250,000 CGTs for 13 vessels.

In terms of the number of vessels, there is not a big discrepancy between 15 vessels for Korean shipbuilders and 13 for Chinese shipbuilders. But in terms of CGTs, to which required human resources, vessel prices and added value are applied, orders placed on Korean shipbuilders were more than double those for Chinese shipbuilders. “This proves that the Korean shipbuilding industry has a competitive edge over the Chinese shipbuilding industry in the high value-added vessel sector," said an official of the shipbuilding industry.

Korea placed first in terms of cumulative orders by country in the January to May period. Korea accounted for 41% with 4.1 million CGTs (87 ships), China for 36% with 3.59 million CGTs (157 ships) and Japan for 11% with 1.13 million CGTs (36 ships). As of the end of May, in terms of order balance, China came in first with 28.22 million CGTs (38%), followed by Korea with 16.96 million CGTs (22.5%).

Meanwhile, Chung Sung-lip, CEO of Daewoo Shipbuilding & Marine Engineering (DSME), emphasized once again that it is desirable for the Korean shipbuilding industry to be reorganized into a Big Two system in the future. He said that the Korean shipbuilding industry should have been transformed into a Big Two system in March of last year. Industry experts say that Chung said so with a plan to marry DSME either with Samsung Heavy Industries or with Hyundai Heavy Industries in his mind.

"Whatever form it will take, I think it is desirable for the Korean industry to be transformed into a Big Two system when considering the global shipbuilding market, competition with China, and industrial courses in the future," Chung said in a press conference held in the Seoul office on June 11.

The Korean shipbuilding industry still has not found its way out of the protracted slump despite an intensive restructuring over the past few years. Only DSME, a company injected with public funds, recorded a surplus in the first quarter and Samsung Heavy Industries and Hyundai Heavy Industries suffered losses. Taking into consideration the fact that the shipbuilding market is not as good as in the past and competition with Chinese companies, it is expected that the Korean shipbuilding industry will not overcome its slump easily.

However, Chung showed confidence in DSME’s order receipts of this year. "DSME has the world's largest order backlog as a single shipbuilder and a 100% utilization rate this year," he said. "By current standards, we have enough work to do until the third quarter of 2020. If we continue our order-taking activities by the end of this year, we will be able to secure work to do until the first half of 2021." As of the end of May, DSME's order receipts totaled US$ 2.8 billion, more than 38% of its 2018 target of US$ 7.3 billion. In particular, CEO Chung said that DSME will achieve tangible results in the offshore plant sector, which had not booked any orders since 2014.