Korean Shipbuilding Industry Shows Signs of Recovery

The Korean shipbuilding industry is showing signs of recovery.

Samsung Heavy Industries announced on April 22 that it has signed a contract with an Asian shipping company to build a floating production storage and offloading (FPSO) unit for 1.1 trillion won on the condition that the client receives approval from its partner and government.

If Samsung Heavy Industries clinches the deal, it will be its first offshore plant project in two years and the first offshore plant contract for Korean shipbuilders this year. The offshore plant business accounted for about half of Samsung Heavy Industries' order receipts in 2017. But in 2018, the shipbuilder has a hard time securing offshore plant projects and failed to attain its order receipt goal of US$ 6.3 billion.

Samsung Heavy Industries' FPSO contract volume amounted to 21 percent of its sales last year. By signing the deal, Samsung Heavy Industries could reach 29 percent of its order target of US$7.8 billion for this year. The order is expected to help the shipbuilder attain its goal this year.

On the same day, Daewoo Shipbuilding and Marine Engineering (DSME) launched two very large crude oil carriers (VLCCs) for European shipowners at the same time. Its Dock 1 is the largest in the world recognized by the Guinness Book of World Records. The dock is 530 meters long and 131 meters wide. The dock can build four vessels –- the two entire bodies and two half bodies of 330-meter-long and 60-meter-wide VLCCs –- at the same time.

According to Clarkson Research, among 759 VLCCs currently operating in the world, DSME built 139, the largest number. DSME has an order backlog of 28 VLCCs, the largest among shipbuilders around the world.

DSME has won orders for 13 vessels and special vessels worth US$2.31 billion so far this year, reaching 27.6 percent of its US$8.37 billion target.