Hyundai Heavy hits jackpot again, clinches $915 mn ship orders

South Korea's major shipbuilding companies are on a winning streak, securing lucrative contracts to build liquefied natural gas (LNG) carriers, Very Large Crude Carriers (VLCC) and container ships. 

On Dec. 16, Hyundai Heavy Industries Co. announced that it had clinched a deal valued at around $915 million to build four 174,000-square-meter LNG carriers and two VLCCs, each with a capacity of 310,000 tons.

A single LNG carrier is priced at around $186 million, and a VLCC is estimated to be worth $89 million per carrier.

The four LNG carriers will be delivered by the second half of 2024 to be used by global energy company Shell. The LNG carriers will be equipped with dual-fuel engines and selective catalytic reduction (SCR) technology to reduce greenhouse gas emissions.

Meanwhile, the VLCCs will be provided with a SOx scrubber to meet environmental regulations. They will be delivered starting in the first half of 2022.

This year, Hyundai Heavy has fetched orders for a total of 100 carriers, valued at around $7.9 billion, reaching near 71% of its annual target.

Meanwhile, the other two shipbuilding heavyweights – Daewoo Shipbuilding & Marine Engineering Co. and Samsung Heavy Industries Co. have also seen a substantial rise in orders as of late, despite enduring a stagnant period earlier this year due to the impact of COVID-19.

Daewoo Shipbuilding has obtained orders for 21 ships valued at around $4.1 billion, reaching 56% of its annual target for this year. 

Samsung Heavy has received orders for 28 ships, valued at around $4 billion, hitting 48% of its annual target, although, in the past month alone, the company has secured orders for 15 ships.

Meanwhile, Hyundai Heavy and Samsung Heavy have recently signed a letter of intent with Greece-based shipping giant Capital Product Partners to build 13,000 twenty-foot equivalent unit (TEU) containers, according to the shipbuilding industry.

The two companies are expected to build 10 ships each, possibly winning a 1 trillion won ($915 million) contract given that a single 13,000 TEU container ship is priced at around 100 billion won.

The future looks promising for the Korean Big 3 shipbuilders, especially since the Shanghai Containerized Freight Index (SCFI), a benchmark of global freight rates, soared to a record high of 2311.76 on Dec. 11, signaling the revival of orders from global shipping companies.

Industry sources say an order for 50 container ships has already been placed to shipbuilding companies in Korea, China and Japan. 

Also, sources say global shipping companies, including Taiwan-based Evergreen Marine Corporation and French shipping company CMA CGM, have made inquiries for Very Large Container Ships (VLCS).

"There are discussions in place for various ship types, so we expect to see additional orders," said a Hyundai Heavy official.


Write to Man-su Choe at bepop@hankyung.com
Danbee Lee edited this article.