15 JULY 2021
The volumes of new ship orders received by South Korea’s shipbuilders hit a 13-year high during the first half of 2021. The South Korean Ministry of Trade, Industry and Energy released the shipbuilding statistics saying that the strong orders were contributing to a rebound in the country’s economy after the impact of the pandemic in 2020.
Using data from Clarkson Research Service, the Ministry highlighted that orders reached 10.88 million compensated gross tons in orders in the first half of 2021. They reported that South Korea’s shipbuilding industry received 44 percent of the total orders placed based on the tonnage in the first half of the year or a total of 24.52 million CGT. The orders were valued at $26.7 billion, which was approximately half the dollar value of orders in the first half of the year.
The Ministry highlighted the 2006 to 2008 boom in shipbuilding pointing out that the orders in the first quarter were the highlighted they had been since 2008. Thirteen years ago, South Korean shipbuilders received orders totaling 13.45 million CGT for the first half of the year. Those orders however represented just a third of the global orders placed in the first half of 2008.
The orders received during the first half of 2021, demonstrated a strong rebound after the lows experienced in the first half of 2020. The Ministry cited date that said orders were up 750 percent of 2020 and further up 183 percent over the positive order volumes received during the first half of 2019.
South Korea’s shipbuilders were especially strong with orders for two vessels types of vessels in 2021. The Ministry highlighted the shipyard’s strong performance with two categories of high-value ships. They said that the South Korean yards received all of the global orders for LNG carriers placed in the first quarter. The yards received nearly two-thirds of the global orders for very large crude carriers (VLCC) and LNG carriers, or a total of 7.23 CGT.
The Ministry also forecast that orders for LNG carriers were likely to contribute to the growth in orders for the second half of this year. They said that Qatar Petroleum is expected to place orders after having signed a deal in 2020 to reserve building spots as it works to expand its gas operations.
Separately, some of the country’s largest shipbuilders reported their strong orders in 2021, citing a rebuilding of their orderbooks. The country’s largest shipbuilder, Hyundai Heavy Industries said that it had achieved 90 percent of its target for 2021 during the first six months of the year.
The strong pace of orders for the shipbuilders is also contributing to strong results for other industries including South Korea’s steel producers. However, the strong demand for steel is also contributing to increases in prices which in turn are putting the shipbuilders’ margins under pressure.
Labor issues are also creating concerns for the shipbuilders. Hyundai Heavy Industries has been in negotiations for two years with its unions over a new labor agreement. Last week, the union stagged what it said would be a brief demonstration, including occupying one of the yard’s large cranes. The union has extended the strike into this week with Hyundai warning that it could begin to impact production and have a financial impact if the delivery of ships is delayed.