K Shipbuilding Co., Ltd., a domestic mid-sized shipbuilder, is set to sign a newbuilding contract for tankers with Greek shipowner J.H.I Steamship (Steamship). Mid-sized shipbuilders have seen a sharp drop in orders this year.

According to the shipbuilding industry on the 30th, K Shipbuilding Co., Ltd. is wrapping up work to sign a newbuilding contract with J.H.I Steamship for two 115,000 DWT (deadweight tonnage) class tankers. The price is $75 million per ship, for a total of $150 million (about 214.6 billion won). The vessels will be delivered sequentially starting at the end of 2027, and discussions also include an option to order one tanker of the same size.

J.H.I Steamship has built its fleet with ships constructed in Japan. TradeWinds, a shipbuilding and shipping trade outlet, analyzed that J.H.I Steamship changed its ordering destination as Japanese shipbuilders exit the low-margin commercial shipbuilding business and focus on the offshore energy sector.

Other mid-sized shipbuilders, including Daehan Shipbuilding and HJ Shipbuilding & Construction Co., also logged a series of orders. Daehan Shipbuilding last month won orders for four Suezmax crude oil tankers from a European shipowner and two more of the same type from an Oceania shipowner. HJ Shipbuilding & Construction Co. also last month received orders from a Greek shipowner for four 8,850 TEU (1 TEU is one 20-foot container ship) class mid-sized containerships.

In the shipbuilding industry, there are calls that the sluggish orders at mid-sized shipbuilders require structural improvement through government support. From the start of the year through last month, the three mid-sized shipbuilders (K Shipbuilding Co., Ltd., Daehan Shipbuilding, and HJ Shipbuilding & Construction Co.) received orders for 22 ships, up one from the same period last year but low compared with 43 ships (1.05 million CGT) in 2021. Currently, mid-sized shipbuilders are known to have secured about two years’ worth of work.

Yang Jong-seo, a senior researcher at The Export-Import Bank of Korea, said, “Domestic mid-sized shipbuilders are failing to properly respond to technological changes in the market, such as eco-friendliness and smartization, due to financial and structural constraints,” and added, “If this situation persists, it will be hard to rule out the possibility that they could disappear in 10 years. There is a need to implement bold support policies in R&D, workforce development, and financing.”

Source: Chosen Biz