Production at South Korean shipyards would grow in full swing next year on the back of increasing new orders amid the ongoing recovery in the global shipbuilding industry and growing demand for eco-friendly vessels before the implantation of tougher emissions regulations in 2020.
According to a report released by Busan-based BNK Finance Research Institute on Friday, Korean shipbuilders in Busan, Ulsan, and South Gyeongsang Province on the country’s southeast coast in which Korea’s three major shipyards and other small peers are based won 7.56 million compensated gross tonnage (CGT) new orders in the January-August period, more than doubled from the same period a year ago. The volume accounts for 42.4 percent of global orders, up from 27.3 percent last year. The number of orders won by Korean shipyards is growing at the fastest pace, shoving Chinese rivals to win the most number of orders globally.
The private research institute projected production at Korean shipyards would hit bottom this year and see a full-swing growth next year for the first time in six years thanks to rising orders amid the ongoing recovery in the global shipbuilding industry. There is a time lag between rising orders and an improvement in production.
So far this year, container vessel orders have surged 264 percent from 860,000 CGT last year to 3.13 million CGT this year and LNG vessel orders 243.4 percent from 1 million CGT to 3.43 million CGT, the report showed. The increase comes in line with efforts by shipping companies to prepare for tightened regulations on sulfur content from 2020.
The report, however, noted that large shipbuilders are the biggest benefiters from the order increase. They won 7.24 million CGT orders in the January-August period, up 121.7 percent from the same period a year ago.
A rise in the price of vessels is another positive factor that would accelerate the recovery in the Korean shipbuilding industry. The newbuilding price rose 4.2 percent in the January-August period from the same period of last year. The newbuilding price of container vessels rose 9.8 percent, bulk carriers 9.6 percent, and oil tankers 6.7 percent over the cited period.