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Shipbuilding orders

Samsung Heavy sets new global record with $2.5 bn order

Mar 26, 2021 (Gmt+09:00)

(courtesy of Samsung Heavy Industries)
(courtesy of Samsung Heavy Industries)

South Korea’s Samsung Heavy Industries has landed an order to build 20 very large container ships (VLCS) at 2.8 trillion won ($2.5 billion), the largest amount for a single shipbuilding order in the world.

The shipbuilder said on Mar. 26 that it secured a deal from Taiwan’s shipping giant Evergreen Marine Corp. to build 20 VLCS.

VLCS are container ships with a capacity of 10,000 to 20,000 twenty-foot equivalent unit (TEU), with one TEU taking up the volume of a twenty-foot-long container box. The capacity of the vessels that Samsung will deliver under the deal is 15,000 TEU.

This record-breaking deal marks a total value of $5.1 billion of orders so far in 2021, marking a 65% achievement of the company’s annual target at $7.8 billion.

Industry experts had originally projected that Evergreen was likely to divide its order to Samsung Heavy and China’s Hudong-Zhonghua Shipbuilding Co., but Samsung made a surprise by winning the whole part.

Samsung Heavy’s order backlog, the money amount of the products ordered by customers but are not shipped yet, is also the highest in last five years at $25.8 billion.

“We will continue our efforts to meet the annual target based on our dominance in LNG fuel propulsion and offshore plant areas. At the same time, we will develop eco-friendly products to win the future competition,” said Samsung Heavy Industries CEO Jung Jin-taek.

KOREAN SHIPBUILDERS MAKING A COMEBACK

Meanwhile, Samsung’s domestic competitor Hyundai Heavy Industries Co. on the same day has also won an order to build 5 container ships with capacity of 13,200 TEU from Taiwan’s Wan Hai Lines.

Hyundai Heavy achieved more than 30% of annual target with this new order. Another Korean shipbuilder Daewoo Shipbuilding & Marine Engineering Co. has also achieved more than 20% of annual target so far this year.

As the typical industry practice is to place orders in the second half of the year, the three Korean shipbuilders’ achievement as of March is at an unprecedented rate.

“It feels like we’re back to when the industry was thriving prior to the 2008 financial crisis,” said an industry official.

This year’s ongoing rally for the shipbuilding industry has largely to do with the economic rebound expected with the launch of vaccination programs around the world.

Another key factor that puts Korean shipbuilders ahead of its global competitors, according to industry analysts, is the global strengthening of environmental regulations.

Korea has strengths in the relatively eco-friendly technology of LNG fuel propulsion, now being more commonly used in container ships as well as crude carriers.

The analysts say that the rally will continue for the Korean shipbuilders in the second half of 2021, as LNG projects are expected to resume in Qatar, Russia and Mozambique, with the Qatar project estimated to be worth around 10 trillion won ($8.8 billion).  

Write to Man-Su Choe at bebop@hankyung.com

Daniel Cho edited this article.

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