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Korean shipbuilders seek overseas yards for surging orders

South Korean shipbuilders are seeking overseas production bases through mergers and acquisitions to meet soaring demand across the world as they have secured works for the next five years.

Hanwha Ocean Co., the country’s No.3 shipbuilder, decided to establish a holding company in the US to acquire shipyards in North America on Nov. 16.

The company, formerly Daewoo Shipbuilding and Marine Engineering Co., set aside 420 billion won ($321.6 million) for manufacturing bases and stakes in other firms for its defense products when it raised 1.5 trillion won through a rights offering earlier this month. The move aimed at securing docks at home to build vessels with high profitability while producing defense products in other countries.

HD Korea Shipbuilding & Offshore Engineering Co. (HD KSOE), an intermediate holding firm of South Korea’s top shipyard HD Hyundai Co., started considering takeovers of overseas shipbuilders, according to industry sources in Seoul on Sunday.

“We kept the door open for acquisitions of foreign shipbuilders and other measures as we need to compete against Chinese rivals in the long run,” said an HD KSOE executive at an earnings conference call for the third quarter.


HD Hyundai Heavy Industries Co., the world’s second-largest shipbuilder, on Nov. 14 signed a deal to build two liquefied natural gas (LNG) carriers for 698.1 billion won with an African customer, industry sources said. The subsidiary of HD KSOE is scheduled to deliver those vessels in February 2028.

“We decided on the delivery date considering our docks are already full,” said an HD KSOE official. “The shipping company placed the order for long-term demand and agreed on the delivery date.”

Samsung Heavy Industries Co., HD KSOE’s smaller rival, in June inked a contract worth 659.2 billion won to manufacture two LNG tankers for delivery in February 2028. Samsung has started the production in June.

HD Hyundai moved up the delivery dates of vessels previously ordered through agreements with customers to secure docks for new ships. It put the delivery of three very large gas carriers won in July forward to August 2026 from December in the year. It also tweaked the delivery schedule of two VLGCs secured in August to October 2026 from the original July 2027.


The move came as the shipbuilder has been enjoying overwhelming orders. HD KSOE has won $20.9 billion in deals to build 147 vessels so far this year, topping its order target of $15.7 billion for this year by a third.

Its subsidiaries’ order backlogs totaled 82.2 trillion won including HD Hyundai’s 47.1 trillion won, Hyundai Samho Heavy Industries Co.’s 23.5 trillion won and Hyundai Mipo Dockyard Co.’s 11.6 trillion won.

Samsung and Hanwha have also secured works for the next four years with their order backlogs mounting to 29.8 trillion won and 25.8 trillion won, respectively.

Given those orders, South Korean shipbuilders are focusing more on orders with high profitability, especially contracts to build eco-friendly ships such as ammonia-fueled vessels.
Source: The Korea Economic Daily

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