Chinese shipyards eat away Korean shipbuilding market
Hyundai Heavy Industries Co. said it has won orders to build 17 out of 27 very large ore carriers placed by South Korean shipping lines, while Chinese shipbuilders have secured or are in the process of getting contracts for the remaing ships.
The shipping companies that won the Brazil-based Vale’s iron ore shipment orders signed contracts with both South Korean and Chinese shipbuilders, which can hurt the ship building industry. The ships will be used to transport iron ore from Brazil to China. Vale is the world’s largest iron ore producer.
Hyundai Heavy is set to hand over 15 325,000-ton vessels to Polaris Shipping Co., a South Korean shipping line, in stages in the coming years.
Hyundai Heavy has also clinched a deal with the Korea Line Corp. to build two very large ore carriers for the shipping firm.
Of the remaining 10, PanOcean Co., South Korea’s leading bulk carrier, has placed orders with a Chinese shipbuilder for six very large ore carriers.
SK Shipping Co., and H-Line Shipping Co. — the two other South Korean local shipping lines — could also place orders with Chinese shipbuilders for two very large ore carriers each, according to industry sources.
Hyundai Heavy is reportedly working hard to win the contract from H-Line Shipping, though no details were available.
The latest development shows Chinese shipbuilders are able to win orders from South Korean shipping and build very large ore carriers.
South Korean shipyards have been hit hard by a drop in demand for new ships in the wake of sluggish global economic growth, as well as low crude and gas prices in the past few years.
Local shipyards have since laid off workers through voluntary retirement programs, forced employees to take leave and even requested cuts in salaries to stay afloat.