SHIPBUILDING

Cosco Shipping Energy Orders Seven Ships from Dalian

China’s Cosco Shipping Energy Transportation has entered into agreements with Dalian Shipbuilding for the construction of HKD 4.32 billion (USD 553 million) worth of new ships. Under the deals, signed on November 20, the company ordered four very large crude carriers (VLCCs) and three Suezmax tankers. The new VLCCs are expected to be delivered in August, October, December 2020 and March 2021, respectively. While the Suezmaxes are set to join their owner in August and November 2020 and January 2021. Cosco Shipping Energy Transportation said that an EGM will be convened for the shareholders to consider and approve the agreements. The company has announced the proposed non-public issuance of A shares in an effort to finance the tankers. If the sale of shares does not proceed, the construction...

Ship Recycling Market in Limbo

The ship demolition market is plagued by a high level of uncertainty leaving the market analysts in limbo when it comes to discerning which direction the market will take.  Despite the lack of tonnage, reports suggest that there is a general apathy from the actual ship recyclers making it very hard to judge market sentiment, Clarksons Plateau said in its latest shipbroking report. “Asking cash buyers for an indicative price in today’s market for a particular vessel is intriguing at this time. Without any real transparency and confidence, the price differential between varied cash buyers could be a USD 20/ldt gap. Thus, only when several sales are reported do we ascertain the true value of a unit and market sentiment,” Clarksons added. “We certainly had expected to see more supply than is c...

Hyundai Heavy Rejigs Management Structure

South Korean shipbuilder Hyundai Heavy Industries (HHI) has made changes in its management team ahead of establishing a holding company structure. Through the reshuffle, unveiled in a stock exchange release on November 14, the company’s vice chairman and co-CEO Kwon Oh-gap will resign and assume a different role in the company, while HHI’s current president and chief executive Kang Hwan-goo will take sole leadership of the company. Additionally, Choi Ki-sun has been promoted to vice president and will be in charge of managing the company’s subsidiaries, according to media reports. It is understood that Kwon Oh-gap will continue as a representative of the holding company. The name and launch date of the holding firm are yet to be unveiled. The changes have been made as part of HHI’s plan to...

Singaporean Shipbuilders Making Korea’s Big 3 Shipbuilders Tense

Ared flag was raised for Korean shipyards such as Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering (DSME) and Samsung Heavy Industries which had dominated the offshore plant market. This is because they are losing orders to Singaporean shipyards which have not been even recognized as their competitor so far.  In particular, bidding prices submitted by Singaporean shipbuilders are much lower than those of Korean shipyards. Of course, it is still unclear whether or not the bidding prices suggested by Singaporean shipbuilders can give rise to profits. There is still a possibility that Singaporean shipbuilders are suggesting unreasonably low bidding prices to receive orders to build up their experience. One thing is clear. If this trend holds, it will become nearly imposs...

DSME Sells Mangalia Yard in Romania at $26 Million

Daewoo Shipbuilding & Marine Engineering (DSME) announced on November 10 that the company sold off its subsidiary Daewoo-Mangalia Heavy Industries based in Romania.  DSME signed a sales and purchase agreement (SPA) with Damen Shipyards Group, the Netherlands’ largest shipbuilding company to sell its 51 percent stake in the Mangalia shipyard at 29 billion won (US$25.87 million). The two companies will finalize the transaction by November 29. The latest sale of the Mangalia shipyard will lighten the financial burden on DSME. The shipyard was a joint venture of DSME and Romania’s state-run shipbuilder 2 Mai Mangalia Shipyard (2MMS) established in 1997 when DSME was an affiliate of Daewoo Group. The Mangalia shipyard ranked among top 10 leading companies in Romania in four years afte...

DSME Posts Profit for Q3

South Korean yard giant Daewoo Shipbuilding and Marine Engineering (DSME) ended the third quarter of this year with a profit of KRW 45.7 billion (USD 41 million), compared to a net loss of KRW 284 billion posted a year earlier, Yonhap said. The troubled shipbuilder is significantly better off than last year after a rescue package from the South Korean government in the spring.   DSME, which has battled a highly publicised liquidity crunch for the past two years,  posted profit for the third straight quarter from July through September, largely thanks to cost-cutting measures and increased delivery of offshore facilities. The improvement in the bottom line marks the third straight quarter that the shipyard remained in the black. The shipbuilder logged an operating income of 207 billion won ...

Environmental Regulations on Vessels Giving Rise to Mixed Market Prospects

There are mixed prospects on how the oil refinery and shipbuilding industries will respond as the International Maritime Organization (IMO) will tighten environmental regulations on vessels beginning in 2020. While the oil refinery industry which currently dominates the vessel fuel market has begun to keep their markets, the shipbuilding industry is expecting liquefied natural gas (LNG) to rise as a substitute for current oil for ships.  According to the oil refinery and shipbuilding industry on November 6, the IMO decided to strengthen its sulfur content regulation from 3.5% to 0.5% for ships on international routes beginning in 2020. So, the decision is expected to drive changes not only to the shipping industry but also to related industries. There are three ways for shipping companies ...

Back from the abyss: South Korea’s shipbuilders begin ascent to growth

Sparks light up the night-shift at giant shipyards on South Korea’s southeast coast, as welders and fitters at some of the world’s biggest marine engineers forge next-generation container ships, oil rigs and even ice-breaking tankers in a bid to clamber out of a global industry abyss. Sunk by drastic cuts in orders from customers hit by the 2008 financial crisis, South Korea’s shipping landscape has been littered with bankruptcies and billion-dollar losses. But some, like Busan’s DSME, are adding innovation to craftsmanship to tap new demand for nimbler ships and offshore energy platforms. The stakes are high for South Korea, jostling with Japan and China to lead an industry revival. Global orders – the trio account for four of every five merchant vessels built – grew nearly tw...

Hyundai Heavy Q3 net edges up

 Hyundai Heavy Industries Co., a major South Korean shipyard, said Tuesday that its third-quarter earnings increased 2.1 percent from a year earlier on cost-cutting efforts and the delivery of high-priced ships. Net profit reached 197 billion won (US$176 million) in the July-September period, compared with a profit of 193 billion won a year earlier, the company said in a regulatory filing. Operating income tumbled 21 percent on-year to reach 93.5 billion won, while sales dipped 27.3 percent to 3.8 trillion won over the cited period. For the year, the shipbuilding company aims to win orders worth $4.3 billion. In June, Hyundai Heavy spun off its noncore businesses, aimed at what it claims will boost each business unit’s competitiveness. Under the plan, the shipyard split into four ind...

Vessel Operating Costs to Rise in 2017 and 2018

Vessel operating costs are expected to increase in both 2017 and 2018, according to the latest survey by international account and shipping consultant Moore Stephens. Repairs & maintenance and spares are the cost categories which are likely to increase most significantly in each of the two years. The survey, based on responses from key players in the international shipping industry, predominantly shipowners and managers in Europe and Asia, revealed that vessel operating costs are likely to rise by 2.1% in 2017 and by 2.4% in 2018. The cost of repairs & maintenance is expected to increase by 2.0% in both 2017 and 2018, while expenditure on spares is predicted to rise by 2.0% in 2017 and by 1.9% in 2018. Drydocking expenditure, meanwhile, is expected to increase by 1.7% and 1.8% in 2...

HHI’s Survival Put to Question If Order Shortage Persists

Despite a surge in orders at South Korean shipyards in September which enabled them to overpower their Chinese counterparts, Hyundai Heavy Industries (HHI) seems to be suffering from acute lack of orders. According to HHI’s Vice Chairman Oh-Gap Kwon, cited by local media, the company managed to score orders for 30 vessels this year, which is only a third of the expected orders for over 100 ships. Speaking on Thursday at a review carried out by South Korea’s National Assembly, Kwon said that if orders don’t increase, the company might be forced to shut down operations at all its yards in the next eight months. Namely, the company’s order backlog comprises 75 ships which can be completed in eight months. Furthermore, newbuilding prices have been halved exerting further pressure on earnings f...

France, Italy Agree on STX Shipyard Ownership Split

The French and Italian governments have agreed on a shared ownership deal of the STX France shipyards, but with a clause giving France the right to take control if needed, Le Monde newspaper reported. Le Monde reported, citing an adviser to French President Emmanuel Macron, that Italian company Fincantieri could get 51 percent ownership, including a 1 percentage point stake lent to it by France, which France could take back. Italian state-owned shipbuilder Fincantieri declined to comment. Fincantieri had agreed in May to pay 79.5 million euros ($93.43 million) for a majority stake in STX France, which is being sold following the collapse of South Korean parent STX. But the Italian bid raised fears about French jobs at the Saint-Nazaire site and the French government has also been concerned...

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