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Shipping industry

Hyundai Heavy, Samsung Heavy pull in over $1 trn in VLCC orders

Nov 17, 2020 (Gmt+09:00)

South Korea’s shipbuilders have made a clean sweep of year-end orders owing to to contracts placed for very large crude carriers (VLCCs).

Demand for VLCC and container ships has been on the rise, displacing liquefied natural gas (LNG) carriers, the prized performers for several years before a recent stagnation in orders. 

Hyundai Heavy Industries Holdings Co. said on Nov. 17 that it clinched an order for a fleet of 10 VLCCs valued at around 985.7 billion won ($891.5 million) from an Oceanian shipowner.

The Korean shipbuilding group is set to deliver the VLCC fleet by August 2023.

This year, Hyundai Heavy secured orders for a total of 21 carriers, or 70%, from the 30 VLCC orders placed worldwide. The recent increase in VLCC orders is closely linked to growing anticipation of recoveries in the oil refinery and petrochemicals industries.




According to shipping data provider Clarksons Research, there are about 800 VLCCs operating globally of which Hyundai Heavy constructed around 200, or 25%, as of October.

Meanwhile, local industry peer Samsung Heavy Industries Co. also announced that it secured a contract for three Suezmax crude tankers valued at around 194.6 billion won ($176 million), set to deliver by January 2023.

The two Korean shipbuilders' contract orders combined exceed $1 trillion, flagging a positive outlook for the domestic shipbuilding industry, which has been through a rocky cycle of ups and downs in the past several years.

Recently, Korea's shipbuilding industry has seen some movement thanks to the recovering shipping industry. Shipowners that had stopped orders on the back of the global coronavirus pandemic have begun placing orders, indicating that the worst is behind them.

Also, the Shanghai Containerized Freight Index (SCFI), a benchmark of global freight rates, soared to a record high of 1857.33 last Friday, up 11.6% from the previous week, as orders for container ships have begun to resume.

Write to Man-su Choe at bepop@hankyung.com

Danbee Lee edited this article.

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