HD Hyundai Samho delivered an LNG carrier to the shipowner, marking its first export of the year. This event was quickly followed by HD Hyundai Heavy Industries and HD Hyundai Mipo exporting completed container ships on Jan. 7. These developments signal a strong start for South Korea’s shipbuilding industry in the new year.

The momentum continued as Samsung Heavy Industries signed a contract to build an LNG carrier worth 380 billion won on the previous day. According to the shipbuilding industry on Jan. 21, HD Hyundai Heavy Industries recently signed a letter of intent (LOI) with CMA CGM, the world’s third-largest shipping company based in France, to build 12 LNG dual-fuel container ships of 15,500 TEU. This contract, valued at around 3.9 trillion won, is HD Hyundai Heavy Industries’ first order of the new year.

The estimated price per container ship is $224 million, slightly higher than the $222 million price in the first series order with CMA CGM in July last year. This increase reflects the growing demand for eco-friendly vessels as the International Maritime Organization (IMO) pushes for “net zero” to achieve zero carbon emissions.

Industry evaluations suggest that domestic shipbuilders have laid the groundwork for a “step up” this year by securing large-scale orders from the beginning of the year. Starting with this contract, the three major domestic shipbuilders — HD Korea Shipbuilding & Offshore Engineering, Samsung Heavy Industries, and Hanwha Ocean — are estimated to record over $50 billion in orders this year, a 30% increase from last year.

Experts are optimistic about the shipbuilding industry’s prospects this year, predicting that it will be a meaningful year for catching up with China in market share and improving the profits of domestic shipbuilders. A shipbuilding industry official explained, “As the International Maritime Organization (IMO) pushes for ‘net zero’ to achieve zero carbon emissions, fossil fuel-based businesses are becoming more critical.” This shift is expected to drive global orders for domestic shipbuilders’ main products, such as LNG carriers and methanol-fueled ships.

An industry insider stated, “Although the market share gap with China has widened as Korean shipbuilders adhered to a selective order strategy, this year, Korean companies are in a position to offer more attractive delivery schedules to shipowners, which will normalize Korea’s market share.” With most of the bad orders cleared from the backlog and the labor shortage resolved, performance improvement can be achieved faster than previously expected.

The profit scale of shipbuilders is also expected to increase significantly this year. HD Korea Shipbuilding & Offshore Engineering is projected to record an operating profit of 2.4752 trillion won this year. Samsung Heavy Industries’ operating profit is expected to increase from 475.4 billion won last year to 778.4 billion won this year. Hanwha Ocean’s operating profit is expected to rise from 170.5 billion won to 575.4 billion won this year.

Source: Business Korea