First-quarter orders surpass the total of all Chinese shipyards? South Korean shipbuilding giants launch a rush order mode

In the first quarter, a total of 56 orders worth approximately US$7.3 billion were received, accounting for 35% of global new shipbuilding orders. Recently, in 3 consecutive days, 12 more liquefied gas carrier orders totaling US$2.1 billion were received. Entering 2023, HD Hyundai Heavy Industries, the world's largest shipbuilding company, has started a 'grabbing orders' mode. Its first-quarter orders even exceeded the total order performance of China's shipbuilding industry, and its received high-value-added and eco-friendly vessel orders accounted for more than half of the global total.

Received 56 orders in the first quarter, accounting for 35% of the total global new shipbuilding orders.

According to data released by Clarkson on April 26, HD Hyundai Heavy Industries secured 56 new shipbuilding orders worth approximately US$7.3 billion in the first quarter alone, dominating the order intake momentum in the South Korean shipbuilding industry. The company's order value in the first quarter accounted for about 35% of the global new shipbuilding orders, already exceeding the total order value of China's shipbuilding industry in the first quarter.

Looking at the types of vessels secured by HD Hyundai Heavy Industries in the first quarter, container ships were the most numerous, reaching 19; followed by product tankers (16), LNG carriers (10), LPG carriers (10), and oil tankers (1).

Among HD Hyundai Heavy Industries' three shipbuilding subsidiaries, Hyundai Samho Heavy Industries had the most outstanding order performance. In the first quarter of this year, Hyundai Samho Heavy Industries secured orders for 19 container ships, 7 LNG carriers, and 2 LPG carriers, totaling US$4.9 billion. Notably, these 19 container ships include 12 13,000TEU New Panamax methanol-powered container ships ordered by CMA CGM of France, and 7 9,000TEU methanol-powered container ships ordered by HMM, all of which are new eco-friendly vessels. Especially at the end of March this year, it secured orders for two 174,000 cubic meter LNG carriers from an Oceania shipowner at a unit price of US$259.5 million, setting a new historical record for vessels of the same type. In late March, it also secured orders for two very large LPG carriers (VLGCs) from Kuwaiti shipowner Arab Maritime Petroleum Transport Company (AMPTC) at a unit price of US$103.6 million, making the cost of a VLGC exceed US$100 million for the first time in history.

According to data released by the Financial Supervisory Service of Korea on the 23rd, as of the 20th, HD Hyundai Heavy Industries Group has received a total of 64 vessel orders, amounting to US$7.72 billion, which currently represents half of its full-year order target of US$15.74 billion.

On May 2, Korea Shipbuilding & Offshore Engineering announced that the company had continuously received 12 new vessel orders within 3 days from April 26 to 28, with an order value reaching 2.8 trillion Korean Won (approximately US$2.086 billion). This includes two 200,000 cubic meter LNG carriers, four 174,000 cubic meter LNG carriers, two 88,000 cubic meter LPG carriers, and four 45,000 cubic meter LPG carriers.

According to International Ship Network, Korea Shipbuilding & Offshore Engineering exceeded its order target in 2022, securing a total of 189 new shipbuilding orders with a total contract value of US$22.8 billion, reaching approximately 152% of its annual order target of US$15.05 billion. Among these, Hyundai Heavy Industries secured 60 vessels worth US$10.4 billion, Hyundai Samho Heavy Industries secured 48 vessels worth US$8.6 billion, and Hyundai Mipo Dockyard secured 81 vessels worth US$3.8 billion.

Secured over half of the global eco-friendly vessel orders in the first quarter of this year.

Clarkson data shows that in the first quarter of this year, a total of 238 new vessels were ordered globally, with new shipbuilding investments reaching US$21 billion. Among these, the South Korean shipbuilding industry secured 65 new shipbuilding orders worth US$9 billion; the Chinese shipbuilding industry secured 110 new shipbuilding orders worth US$5.7 billion. Although China secured 45 more new shipbuilding orders than South Korea, the value was US$3.3 billion less than South Korea.

According to International Ship Network, the orders secured by the South Korean shipbuilding industry in the first quarter were mainly high-value-added vessel types such as large container ships and LNG carriers. The value of new shipbuilding orders secured accounted for about 43% of the global total. Particularly, out of the 17 large LNG carriers traded globally in the first quarter, South Korean shipbuilders secured 15, once again establishing their dominant position in the LNG carrier market.

Looking at the main vessel types, in the first quarter of this year, by transaction value, container ship orders amounted to 37 vessels worth US$5.1 billion, ranking first among all vessel types; LNG carrier orders were 17 vessels worth US$4.3 billion, ranking second; bulk carrier orders were 99 vessels worth US$3.7 billion, ranking third; oil tanker orders were 52 vessels worth US$2.5 billion, ranking fourth; and LPG carrier orders were 13 vessels worth US$1.2 billion, ranking fifth.

It is understood that since the beginning of this year, most of the orders secured by HD Hyundai Heavy Industries have been for high-value-added vessels (LNG, LPG, eco-friendly vessels using methanol as fuel, etc.), almost securing more than half of the global eco-friendly vessel orders in the first quarter of this year. As governments worldwide begin to tighten environmental restrictions on ships, the order volume for eco-friendly vessels continues to climb despite their high prices.

South Korean industry insiders stated that South Korean shipbuilders mainly secure orders for high-value-added vessel types, while Chinese shipbuilders focus on bulk carriers and oil tankers, thus the order value differs significantly from South Korea. Looking at the average vessel price for orders in the first quarter, the unit shipbuilding cost for South Korean shipbuilders' orders reached US$138.46 million, while China's was only US$51.82 million.

Yang Jongseo, chief researcher at the Overseas Economic Research Institute of the Export-Import Bank of Korea, stated: 'In the past, Korean shipyards built bulk carriers with special configurations, such as high-manganese steel cargo tanks, but since there was basically no profit, they have not taken on bulk carrier orders. Hyundai Vinashin Shipyard (HVS), a Vietnamese subsidiary of Hyundai Mipo Dockyard, previously built bulk carriers for a long time, but has now shifted to mainly taking orders for MR tankers or LR2 tankers.'

According to analyses by South Korean shipbuilding industry insiders, high energy prices are also one of the main reasons for the increase in orders received by South Korean domestic shipyards. The higher the energy prices, the more favored Korean vessels with excellent fuel efficiency are in the market. However, it is worth noting that due to the long-term downturn in the shipbuilding industry and poor working conditions, the issue of labor shortage in the South Korean domestic shipbuilding industry needs to be addressed. Although the government has introduced a series of policies to expand the recruitment of foreign workers, and South Korean domestic shipyards are actively recruiting and training professionals, the industry is still concerned that the labor shortage will not improve in the short term.