Chosun Big 2 Hit Jackpot with 1.6 Trillion Won Orders (Comprehensive)

Increase in Cargo Volume and Global Economic Recovery Boost Ship Demand
Order Targets: Korean Shipbuilders Achieve 25%, Samsung Heavy Industries Steady at 31%

[Asia Economy Reporter Hwang Yoon-joo] Korea Shipbuilding & Offshore Engineering and Samsung Heavy Industries have fired the starting shot for an industry recovery by announcing orders worth a total of 1.6 trillion won. Although last year's order performance fell short of expectations due to the impact of COVID-19, this year, demand for ships is expected to increase amid global economic recovery expectations and efforts to respond to decarbonization and environmental regulations.

According to the industry on the 9th, Korea Shipbuilding & Offshore Engineering secured orders for eight vessels worth a total of 835 billion won. They signed construction contracts with shipping companies based in Liberia, Oceania, and Europe for four ultra-large container ships of 15,900 TEU class, two ultra-large liquefied petroleum gas (LPG) carriers of 91,000 m³ class, one medium-sized LPG carrier of 40,000 m³ class, and one 50,000-ton PC vessel.

The newly ordered ultra-large container ships measure 364 meters in length, 51 meters in width, and 30 meters in height. They will be built at Hyundai Heavy Industries in Ulsan and are scheduled to be delivered sequentially to the shipowners starting in the second half of 2022. Korea Shipbuilding & Offshore Engineering's order performance reached $3.7 billion (46 vessels), achieving about 25% of this year's order target of $14.9 billion.

Samsung Heavy Industries also secured orders for five ultra-large liquefied natural gas (LNG) fuel-powered container ships of 15,000 TEU class worth a total of 794.2 billion won from shipowners in the Asian region. Among the 19 vessels Samsung Heavy Industries has ordered this year, 14 are LNG fuel-powered ships, accounting for the majority (74%). LNG fuel-powered ships are priced 10-20% higher than conventional vessels. Including this contract, Samsung Heavy Industries has secured a total of $2.4 billion (19 vessels) in orders this year, reaching 31% of its order target of $7.8 billion before the first quarter ended.

This year, expectations for orders are rising due to increased cargo volume and signs of economic recovery. The Shanghai Containerized Freight Index (SCFI), a global container ship freight rate indicator, recorded 2,885 points on January 15, the highest since tracking began in 2009. On the 26th of last month, it recorded 2,775 points, nearly tripling compared to the same period last year (876 points).

It is particularly positive that the domestic shipbuilding industry is standing out in high value-added vessels. In the global market for crude oil carriers, Samsung Heavy Industries has practically dominated the market by building 57% of the LNG fuel-powered crude oil carriers ordered worldwide, accounting for one out of every two vessels.

An industry official said, "With rising freight rates and expectations for increased cargo volume, inquiries for orders are actively continuing, signaling a full-fledged recovery in the shipbuilding market," adding, "We will continue to maintain a competitive edge in the global market based on continuous technological development and quality management."