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Shipbuilding industry

Samsung Heavy, Daewoo Shipbuilding fetch over $4 bn in orders

By Nov 23, 2020 (Gmt+09:00)

South Korea’s shipbuilding industry appears to be entering full recovery mode after almost a year-long drought in orders thanks to Samsung Heavy Industries Co., and Daewoo Shipbuilding & Marine Engineering Co. clinching orders exceeding a combined $4 billion.

Samsung Heavy announced on Nov. 23 that it signed a contract to supply $2.5 billion worth of ship blocks, materials and equipment to a European shipyard. This marks the largest order the company has secured under a single contract since its inception in 1974.

The company refrained from disclosing details, but industry watchers assume that the hefty order may be tied to Arctic LNG 2, a large-scale liquefied natural gas development project led by Novatek, one of Russia's largest gas producers.

At the very least, the order is a stepping stone for the company to recover from its recent liquidity crisis, industry watchers say.


Daewoo Shipbuilding's icebreaking LNG carrier
Daewoo Shipbuilding's icebreaking LNG carrier

This year started off gloomy for domestic shipbuilders due to the impact of COVID-19, which caused shipyards to delay orders alongside a temporary suspension of global LNG projects.

But the tables turned in the second half of the year as the Big 3 —Hyundai Heavy Industries, Samsung Heavy Industries, Daewoo Shipbuilding — were able to lock in impressive contracts totaling around $7.4 billion.

In addition to Samsung Heavy's contract, industry peer Daewoo Shipbuilding secured an icebreaking LNG carrier contract valued at around $1.8 billion for Russia’s LNG project.

Also, last week Hyundai Heavy Industries Holdings Co. hit the jackpot as it received orders to build 10 very large crude carriers (VLCC) valued at around 1 trillion won in total.

This year alone, Hyundai Heavy has 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 expectations of recoveries in the oil refinery and petrochemicals industries.

In addition, ocean freight charges have reached an all-time high, which has prompted a rise in orders for container ships.

Korean shipbuilding companies expect the momentum to continue given that LNG projects in Mozambique, Qatar and Canada are expected to resume in the near future, which means a likely rise in LNG carrier orders.


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

Danbee Lee edited this article.

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