Heated Competition

The Okpo shipyard of Daewoo Shipbuilding & Marine Engineering.
The Okpo shipyard of Daewoo Shipbuilding & Marine Engineering.

 

Japanese shipyards have won 14 shipbuilding contracts, equivalent to 991,000 CGT, last month to record a market share of 45.9 percent and beat their Korean and Chinese rivals. 

The excellent performance of Japanese shipyards, considered to be benefiting in part from the weak yen, is a piece of bad news for their Korean counterparts, with the shipbuilding industry showing few signs of recovery. It could lead to an even fiercer competition in the merchant ship market, with the offshore plant market remaining in the doldrums since the second half of last year due to the recent drop in oil prices. Then, the new building price could plummet. 

The new building price index increased from 126 to 140 between Nov. 2012 and June last year. However, it dropped again to stand at 137 as of last week. The decline can be attributed to the supply side rather than demand given that the charter index has increased by no less than 50 percent since June 2013. 

China is currently reducing its shipbuilding, capacity with smaller shipbuilders leaving the industry since 2013. Korean shipbuilders are also refraining from price dumping in the wake of the massive losses posted last year. Nevertheless, Japan succeeded in increasing its shipbuilding capacity last year, and recently announced plans for facility expansion.

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