A worker near a ship which is currently under construction at Hyundai Heavy Industries’ Shipyard in Ulsan, South Korea, May 13, 2015. REUTERS/Kim Hong-Ji/File Photo
SEOUL, June 2 (Reuters) – South Korea’s ailing shipbuilders have been thrown a lifeline in an increasingly tough market with a $19 billion order from Qatar Petroleum (QP) for liquefied natural gas (LNG) ships, analysts said on Tuesday.
Qatar’s state-run LNG producer signed agreements with South Korea’s “Big 3” shipyards on Monday to secure more than 100 ships through 2027, in the largest-ever single LNG vessel order.
With a steep market downturn on the horizon, the orders had come at the right time for Daewoo Shipbuilding & Marine Engineering Co Ltd, Hyundai Heavy Industries Holdings Co Ltd and Samsung Heavy Industries Co Ltd , analysts said.
“They would have been worrying about their own survival next year if they didn’t win this Qatar deal,” said Lee Dong-heon, an analyst at Daishin Securities, who estimated the trio would now have an order backlog stretching a year-and-a-half.
Shares in the three shipbuilders rallied over 20% on Tuesday.
“This is the largest single LNG vessel order in history. We have never seen so many LNG vessels ordered in the same year, let alone by a single buyer,” said Saul Kavonic, analyst from Credit Suisse.
The industry has been suffering from a prolonged shipbuilding slump that has led to massive losses, job cuts and a bailout from the government. Lee said market forecasts had indicated a 30% fall in orders this year from a year ago.
Park Moon-hyun, an analyst at Hana Financial Investment Corp, said the deal could be a “opportunity for South Korean shipbuilders to overcome setbacks they have faced … and focus on what they are good at.”
QP did not announce breakdown orders for each company.
Samsung Heavy said it expects to sign deals starting this year through 2024 and expected a positive impact on orders by shipping companies who are considering LNG vessels. Both Hyundai Heavy and Daewoo Shipbuilding declined to comment.
($1 = 3.7535 riyals) (Reporting by Heekyong Yang and Jane Chung in Seoul; Additional reporting by Hyunjoo Jin in Seoul and Jessica Jaganathan in Singapore; Editing by Christopher Cushing and Richard Pullin)
By Malte Humpert (gCaptain) – Just days after securing funding in the FY 2025 budget to acquire a commercial icebreaker, the U.S. Coast Guard says it has made little headway...
SYDNEY, March 21 (Reuters) – Fiji will strike a deal with Australia to upgrade ports and shipbuilding infrastructure, months after its prime minister said it was likely to partner with China on the...
US Labor unions are calling for a fee to be imposed on vessels constructed in China that dock at US ports in response to what they perceive as unfair shipbuilding...
March 13, 2024
Total Views: 3522
Why Join the gCaptain Club?
Access exclusive insights, engage in vibrant discussions, and gain perspectives from our CEO.
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.