South Korean shipbuilders' order intake surpasses China's again in May

In May, South Korean shipbuilders surpassed China in new order volume, reclaiming the top global spot. However, given the significant decrease in global new ship orders, achieving their yearly targets remains challenging.

South Korean shipbuilders ranked first in May's new order volume, capturing 60% of the market share.

After trailing behind China for two consecutive months, South Korean shipbuilders successfully regained the lead in May, securing 60% of global new ship orders and claiming the top spot.

Clarkson's latest data reveals that in May, global new ship orders totaled 34 vessels with 1.06 million CGT, a 26% decrease compared to April's 49 vessels and 1.44 million CGT, and only two-thirds of the 15.22 million tons recorded during the same period last year.

Among them, South Korean shipbuilders received orders for 16 vessels with 0.64 million CGT, accounting for approximately 60% of the global market share and ranking first globally. This figure significantly surpasses that of Chinese shipbuilders, who received orders for 8 vessels with 0.27 million CGT in May, representing 25% of the global market share and ranking second. Japanese shipbuilders secured orders for 3 vessels with 0.06 million CGT, ranking third.

As the ongoing US-China trade dispute impacts the global shipping industry, global new ship orders in the first five months of this year totaled 9.41 million CGT, a 38% decrease compared to the same period last year.

Chinese shipbuilders ranked first globally in the first five months, with a total of 166 vessels and 4.06 million CGT, accounting for 43% of the global market share. South Korean shipbuilders ranked second, with 63 vessels and 2.83 million CGT, accounting for 30% of the global market share. Italian shipbuilders ranked third, with 14 vessels and 1.11 million CGT, accounting for 27% of the global market share. Japan ranked fourth, with 46 vessels and 0.86 million CGT, accounting for 9% of the global market share.

Compared to the same period last year, South Korean shipbuilders' order volume in the first five months remained relatively consistent. However, China and Japan experienced varying degrees of decline, with reductions of 0.64 million CGT and 0.56 million CGT respectively.

South Korean shipbuilders received the most orders for LNG carriers, with 21 vessels totaling 1.81 million CGT, remaining consistent with the same period last year (21 vessels, 1.82 million CGT). Orders for VLCCs and Capesize bulk carriers were 10 vessels with 0.43 million CGT and 27 vessels with 0.92 million CGT respectively, decreasing by 73% and 51% year-on-year.

Prices for different ship types also fluctuated in May. Oil tanker prices remained at $93 million, unchanged from April; container ship prices decreased by $0.5 million to $111.5 million; and LNG carrier prices increased by $0.5 million to $185.5 million.

According to Clarkson's data, as of the end of May, Chinese shipbuilders still held the largest order backlog globally, reaching 29.47 million CGT, accounting for 37% of the global market share. South Korean shipbuilders ranked second with 21.12 million CGT, accounting for 26% of the global market share. Japanese shipbuilders ranked third with 14.09 million CGT, accounting for 18%.

Global new shipbuilding market downturn; South Korean shipbuilders may struggle to meet order targets.

Although South Korean shipbuilders surpassed China in May's order volume, industry insiders believe that due to the decline in global new shipbuilding orders, it will be difficult for them to achieve their annual order targets this year.

Data shows that in the first five months of this year, South Korea's three major shipbuilders received new ship orders totaling $7.53 billion, only 23.5% of their combined annual target of $32 billion.

Among them, Hyundai Heavy Industries Group (including Hyundai Heavy Industries, Hyundai Mipo Dockyard, and Hyundai Samho Heavy Industries) received only $2.5 billion in orders in the first five months, equivalent to 15.7% of its annual target of $15.9 billion, the lowest completion rate among the three major shipbuilders.

In contrast, Samsung Heavy Industries received $2.53 billion in orders in the first five months, achieving 32.4% of its annual target. Daewoo Shipbuilding received $2.5 billion in orders in the first five months, achieving 29.8% of its annual target.

Industry observers predict that as the US-China trade war may last longer than expected, the growth rate of global new ship orders will slow down, making it difficult for South Korean shipbuilders to accelerate their order intake; even if the two countries reach an agreement this month, new ship orders are unlikely to increase rapidly.

Currently, observers have lowered their expectations for global new ship orders this year. Hanwha Investment & Securities has lowered its full-year forecast from 41 million CGT to 28 million CGT. Clarkson also lowered its 2019 forecast in March, from 34.44 million CGT at the beginning of the year to 30.4 million CGT.

On the other hand, due to growing concerns about global economic uncertainty, observers are also lowering their expectations for LNG carrier orders, which are a major part of South Korean shipbuilders' business. Last year, Clarkson predicted that LNG carrier orders would reach 69 vessels this year, but this prediction has now been reduced to 55 vessels.