Hit by COVID-19
The three major Korean shipbuilders had attained even less than 5 percent of their annual order targets until last month.
By February this year, the combined order receipts of the three shipbuilders stood at US$1,177 million, only 3.8 percent of their annual target.
Korea Shipbuilding & Offshore Engineering (Hyundai Heavy Industries, Hyundai Mipo Dockyard and Samho Heavy Industries) landed orders of only US$587 million in the first two months of 2020. The figure is only 3.7 percent of its annual order target. Daewoo Shipbuilding & Marine Engineering (DSME) and Samsung Heavy Industries recorded 3.9 percent (US$290 million) and 3.6 percent (US$300 million), respectively.
The low percentages are blamed on sharp drops in their order receipts. The amount of ship orders worldwide in the first two months of the year hit 1.17 million CGTs, much lower than 7.77 million CGTs in 2018 and 4.89 million CGTs in 2019.
A plunge in international oil prices also adds to the possibility of a delay in order placement. On March 19, Dubai Crude traded at US$25.82 a barrel and Western Texas Oil (WTI) at US$25.22, respectively, which were about one third of their prices at the beginning of this year. If oil price volatility increases, uncertainties over investment in offshore plants will inevitably increase.
Large LNG carrier projects in Qatar and Mozambique much anticipated by Korean shipbuilders are expected to go ahead this year as scheduled. However, even if the novel coronavirus fiasco subsides, it will take some time for trade cargoes to recover so it the three shipbuilders will face many difficulties in achieving their order goals this year. Last year, the three shipbuilders managed to attain 70 to 90 percent of their annual targets.