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Thursday, October 11, 2018 

Latest analysis reports suggest that South Korean shipbuilders’ order receipts are recovering compared to last year, despite poor performance from the ‘big three’ yards in the third quarter of 2018.

Hyundai Heavy Industries (HHI), Samsung Heavy Industries (SHI) and Daewoo Shipbuilding & Marine Engineering (DSME) all expect to attain their order targets for the current financial year. Currently all three report order intake at 60% to 70% of year-end target, and with new orders historically being concentrated in the second part of the year, the yards are quietly confident. However, HHI and SHI are expected to continue to post losses, while DSME is expected to remain profitable, albeit with a smaller profit.

According to Korean reports, HHI posted US$10.4 billion in order receipts as of the end of September, attaining 79% of this year’s target of US$14.8 billion. The company landed 129 new orders in total, ranking first among the top three Korean shipbuilders. But the company failed to record its expected US$1.6 billion of new orders for offshore plants. By vessel type, the group booked orders for 31 high value-added gas vessels including 16 LNG carriers, 12 LPG tankers and three ethane carriers, 47 container ships, and 47 tankers. This is the largest order volume since 2013.

DSME has also exceeded half of its target for this year, with 35 orders worth US$4.6 billion, or 63% of its US$7.3 billion target for 2018. Although DSME won no offshore plant orders, it landed orders for 12 LNG carriers, 15 large-scale crude oil tankers, seven super large containerships, and one specialised vessel.

SHI has achieved 40 newbuilding contracts, valued at US$4.7 billion, so far this year, reaching 57% of its year-end target. The 40 ships include a 174,000m3 LNG carrier worth around US$176 million from an Asian shipping company, plus 10 LNG carriers, 13 container ships, 14 tankers and three special ships.

Although order intake is showing signs of recovery, the shipbuilders are still under financial pressure thanks to increases in steel and raw material prices which have exceeded market prices for new ships.

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