DALIAN, China (Dow Jones)–STX Group, a South Korean conglomerate, will catch up with its bigger rivals in offshore facility orders from the second quarter as it has some clients who put a more focus on quality than price competitiveness, the group’s holding company president said late Friday.
“We expect some deals coming to be signed with clients more concerned about product quality in a win-win strategy though China’s participation in the offshore facility market is escalating worries that it may result in lower contract prices,” STX Corp. (011810.SE) President Choo Sung-yob told Dow Jones Newswires in an interview.
The group’s shipbuilding units in Jinhae, South Korea, and Dalian, China, have enough capacity to build ships through 2013 as its three bigger rivals–Hyundai Heavy Industries (009540.SE), Samsung Heavy Industries (010140.SE) and Daewoo Shipbuilding & Marine Engineering (042660.SE)–have already filled some of their capacity, said Choo.
Analysts said the Big 3 shipbuilders are expected to wait for the time being until higher shipbuilding plate prices are reflected in new vessel prices. “During the time, STX Offshore has a chance to receive orders from shippers who choose to place orders before vessel prices rise,” said Park Moo-hyun of E*Trade Securities.
Over concerns of narrowed margins due to higher input costs, Park said if STX Offshore transfers less value-added ship orders to the Dalian shipyard from the Jinhae shipyard, it will likely to guarantee some margins for the company under its three-pillar production system.
“At stake for now is how fast productivity will improve in the Dalian shipyard,” said Park, adding given that STX Dalian delivered eight ships in the first quarter compared to four to five a year earlier, productivity improvement is picking up speed.
STX Group said it plans to produce high-end ships such as large container carriers in Jinhae, less value-added ships such as bulkers in Dalian and luxury cruise ships in Europe.
In the first quarter ended March 31, STX Offshore & Shipbuilding Co. (067250.SE), a shipbuilding affiliate of the country’s 12th-largest conglomerate by assets, didn’t get a single order for offshore facilities such as floating storage units and offshore plants. STX Offshore earlier set $1.5 billion in its offshore facility order target for the year.
The world’s No. 4 shipbuilder by orders just received $330 million worth of commercial ship orders in the January-March period out of its annual order target of $5 billion in the Jinhae shipyard.
But analysts remained positive toward the shipyard’s order outlook in the coming three quarters.
“When it comes to offshore facilities, the size of (STX’s) ongoing projects may exceed the annual offshore target of $1.5 billion to reach $2 billion at the end of the year,” Park forecast.
China still has a long way to go in offshore facilities in terms of technology and in-time delivery compared to South Korean shipbuilders, Park said.
ROME (Reuters) – An Italian judge on Friday cleared three migrant sea rescue charities that had been accused of abetting irregular immigration in complicity with human traffickers, throwing out a case opened...
April 19 (Reuters) – A New York state agency on Friday said it had failed to reach final contract agreements with the developers of three major offshore wind projects, blaming a decision by General...
(Bloomberg) — The closure of one of the East Coast’s busiest ports after the collapse of Baltimore’s Francis Scott Key Bridge has so far not led to broad price increases,...
April 19, 2024
Total Views: 2112
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.