Big 3 Korean shipbuilders win largest orders in 8 yrs

South Korea's three major shipbuilders in 2021 have received their largest amount of orders in eight years, surpassing their targets by 45%, according to the industry sources on Dec. 31.

The Big Three – Korea Shipbuilding & Offshore Engineering Co. (KSOE), Daewoo Shipbuilding & Marine Engineering Co. and Samsung Heavy Industries Co. -- bagged a combined $45.9 billion worth of orders this year, compared with their targeted $31.7 billion.

The figure indicated their thickest order books for a year since 2013, driven by eco-friendly ships and container carriers amid stricter environmental regulations and a global economic recovery from the pandemic.

The Big Three beat their 2021 targets by 152%, 134% and 141%, respectively, securing orders of a combined 367 vessels this year.

That represents about a quarter of new orders for 1,561 ships placed worldwide this year, which was double the previous year's. Eco-friendly vessels, or dual-fuel ships such as LNG carriers, made up 35% of the total. 

In the 11 months to November of this year, South Korea came second to China in terms of ship orders received, accounting for 16.96 million compensated gross tonnage (CGT), according to global market researcher Clarkson Research Service. That was equivalent to 38% of the global shipbuilding market.

Including this month's figure, the orders received by Korean shipbuilders are projected at 18 million CGT. That is compared with the 18.44 million CGT recorded in 2013 when the offshore plant market was in a boom and the 18.2 million CGT in 2008 when the industry was on the brink of a supercycle.  

Shipping companies have increased their new vessel orders to meet rising cargo transportation demand, boosting new shipbuilding prices. But shipbuilders are unlikely to enjoy booming orders again for very large container ships next year.

In 2022, the volume of new shipbuilding orders is likely to decline due to the base effect. New vessel orders are forecast to drop 15.3% on-year to 35 million CGT next year, according to research by the Export-Import Bank of Korea, released in October of this year.

Offsetting the downside, however, would be a steady rise in demand for eco-friendly ships which are 10-20% pricier than conventional vessels, ahead of the implementation of tightened environmental regulations from 2023. Rising raw material prices such as crude oil are also expected to create demand for offshore plants. 

Meanwhile, South Korea is awaiting the European Union’s decision due by Jan. 20 on the proposed combination between the world’s two largest shipbuilders: Hyundai Heavy Industries and Daewoo Shipbuilding.

If the EU vetoes their merger on monopoly concerns, the country's efforts to restructure the overcrowded sector could be brought to naught.

Write to Jung-hwan Hwang at jung@hankyung.com
Yeonhee Kim edited this article.