South Korea’s shipbuilding industry is experiencing a resurgence in container ship orders amid a period of high ship prices and ample order backlogs. This development comes as global new ship orders totaled 1,223 vessels as of July 26, marking a 2% increase compared to the same period last year, according to Clarkson Research, a UK-based shipbuilding and shipping market analysis firm.

The new ship price index stood at 187.98 as of July 26, nearing the all-time high of 191.6 recorded in September 2008. This surge in ship prices is reflected in the cost of ultra-large container ships. For instance, the price of a 23,000 TEU (Twenty-foot Equivalent Unit) container ship rose by 15% from $235 million at the end of last year to $272 million at the end of July this year. Similarly, the price of a 15,500 TEU large container ship increased by 18% from $168.5 million at the end of last year to $199 million at the end of June this year.

HD Korea Shipbuilding & Offshore Engineering recently secured an order for 12 15,500 TEU container ships from a European shipping company, believed to be CMA-CGM, the world’s third-largest shipping company. The total order value was 3.6832 trillion won, with the unit price per ship more than 10% higher than at the end of June.

Samsung Heavy Industries is also actively negotiating orders for eco-friendly container ships, while Hanwha Ocean has indicated during its second-quarter earnings conference call that it is considering orders for large container ships that can secure profitability. “We are considering orders for large container ships that can secure profitability,” stated a representative from Hanwha Ocean.

The South Korean shipbuilding industry, which has already surpassed last year’s order volume with 69 LNG carriers ordered this year compared to 66 last year, is now focusing on container ships. Orders for LPG carriers have also increased by 28% year-on-year to 84 vessels, and container ship orders have risen by 28% to 144 vessels during the same period.

Yang Jong-seo, a senior researcher at the Overseas Economic Research Institute of the Export-Import Bank of Korea, commented on the industry’s strategic shift: “The domestic shipbuilding industry has ample order backlogs, allowing it to pursue selective orders based on profitability.”

This shift is partly driven by the Red Sea crisis, which has disrupted navigation through the Suez Canal, causing freight rates to soar. With freight rates nearly doubling since the beginning of the year, shipping companies, flush with cash, are investing in container ships, leading to a revival in orders.

South Korea’s shipbuilding industry, known for its expertise in high-value-added ships like LNG carriers, is now re-entering the container ship market. The profitability of large container ships has increased to the point where they are now worth pursuing, alongside other high-value-added ships such as ammonia carriers (VLAC).

HD Korea Shipbuilding & Offshore Engineering is reportedly in discussions for an additional order of six 8,000 TEU container ships, further indicating the industry’s focus on securing profitable orders amid a favorable market trend.

Source: Businesskorea