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Wins Over $4 billion Worth of Shipbuilding Orders
During the first four months of the year, Hyundai Heavy Industries won orders totaling $4.3 billion in shipbuilding and offshore plant sectors
Wins Over $4 billion Worth of Shipbuilding Orders
  • By matthew
  • August 13, 2010, 15:23
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During the first four months of the year, Hyundai Heavy Industries Co., won orders totaling $4.3 billion in shipbuilding and offshore plant sectors, 20 times more than a year earlier.

In April alone, Hyundai Heavy posted $1.3 billion worth of shipbuilding orders, with its accumulative orders exceeding $4 billion order for the sectors of shipbuilding and offshore plant so far this year, including 11 ship orders worth $580 million by Hyundai Samho Heavy Industries, making the volume of shipbuilding orders as of end of April increased from end of 2009 to $1.5 billion.

The 23 shipbuilding orders include 3 Very Large Crude Carriers (VLCC), LPG ships, bulk vessels and car carriers.

In February, Hyundai Heavy also recorded $2.6 billion worth of offshore orders, including Floating, Production, Storage and Offloading Vessels for developing gas fields off the coast of Myanmar.

New orders in the first four months jumped 20-fold to $4 billion from $220 million for the same period last year when the industry was experiencing a lack of orders due to the global financial crisis.

The sharp rise in ship orders for April is attributed to stably rising ocean freight rates, such as the Baltic Dry Index (BDI) and the Howe Robinson Container Index (HR), as well as market expectations that the new building price index (the Clarkson Index, released by British market research company Clarkson Research Services) has already hit the bottom.

In the first quarter of 2009, the BDI surged twice to the 3,000 level from last year’s average of 1,500. In March, the HR also saw the first rise since August 2008.

An official with Hyundai Heavy commented that it is a noticeable improvement from fewer ship orders last year. He added that the upward trend will continue, although it is still premature to say that the shipbuilding industry is in a strong recovery.

A recent jump in oil price is also a positive sign for boosting orders in oil tankers and offshore plants.

A recent report by the International Energy Agency (IEA) stated that this year’s global crude oil demands are expected to recover from the financial crisis, which is likely to lead to increased demands for oil transport.

In addition, it is expected that mono-hull type oil tankers are forbidden to operate from 2011, which it is predicted will lead to an increase in the number of oil tanker orders.

Another positive sign is that if major oil companies resume the development of new mining areas, an undertaking which has been suspended due to unprofitability, it can lead to increased orders for building large offshore plants in areas such as Africa, the Middle East, Russia and the North Sea. Hyundai Heavy Industries Co., anticipate better earnings following the launch of six new wheel loader models. On May 13, Hyundai Heavy Industries Co., announced plans to start sales of six new 9 series wheel loader models (9.8~30 ton level) featuring a boom and bucket auto positioning system, a diagnostic system and a weighting system.

The boom and bucket auto positioning system automatically positions the boom and bucket, enabling users to easily operate them with just a single touch of a lever. Furthermore, the models have a fuel efficiency of up to 13 percent more compared to other products.

In addition, environmental-friendly engines have been adopted in order to meet international exhaust gas emission regulations.

The company hopes that these new models will raise its image in the high-end products sector and increase popularity in both domestic and overseas markets, including China. An official with the industry said that with its continuous launches of new high-end products as well as buoyant market conditions in the shipbuilding and offshore plant industries, Hyundai Heavy can stay in a favorable position in the latter part of this year, with the new 9 series wheel loaders increasing expectations.