As the global shipbuilding industry enters a decade-long super cycle, HD Korea Shipbuilding & Offshore Engineering’s (HD KSOE) shipbuilding subsidiary HD Hyundai Mipo has performed well in the first half of this year. In the previous two years, HD Hyundai Mipo’s annual orders totaled less than $4 billion, but in the first half of this year, its orders totaled more than $4.4 billion.
Sources from the South Korean shipbuilding industry have revealed that in the first half of this year alone, HD Hyundai Mipo’s total orders have exceeded those for the whole of 2023. From January to the end of June this year, HD Hyundai Mipo took orders for new vessels worth US$4.45 billion, exceeding the US$3.6 billion for the whole year of 2023. As of June 30 this year, HD Hyundai Mipo’s hand-held orders were worth US$8.79 billion, equivalent to two to three years of work for this year’s expected total orders.
According to some analysts, HD Hyundai Mipo’s strong performance is attributed to record newbuilding prices and increased demand for product tankers and container ships. In particular, the newbuilding price for product tankers, which is HD Hyundai Mipo’s main product, exceeded US$50 million for the first time since 2008 and soared to US$52 million at one point.
In the two years of 2022 and 2023, HD Hyundai Mipo’s order-taking situation has been poor, the total annual order amount did not reach US$4 billion, resulting in operating losses for the past seven consecutive quarters. The Korean media explained it as the low price of order taking by Chinese shipbuilders and the decline of newbuilding prices are the reasons why HD Hyundai Mipo is in a disadvantageous position in the global order competition. However, as the shipbuilding industry enters its first super cycle in a decade, HD Hyundai Mipo’s performance is showing signs of recovery.
South Korean industry analysts believed that geopolitical factors such as the Russia-Ukraine conflict and the Red Sea crisis have driven the growth in orders. The Russian-Ukrainian conflict led to an increase in demand for oil tankers, while the Red Sea crisis led to a sharp rise in maritime freight rates, which allowed shipping companies to reap huge profits, and orders for container ships also increased.
It is reported that HD Hyundai Mipo is responsible for the construction of product tanker orders contracted by HD KSOE, with a cumulative order value of about $4.7 billion so far this year. At present, HD Hyundai Mipo’s operating profit is still in the red, and it is expected to start improving its profitability in 2026.
It is worth noting that HD KSOE has become the first shipbuilding company among the three major Korean shipbuilding companies (HD Hyundai, Hanwha Ocean and Samsung Heavy Industries) to fulfill its annual order target ahead of schedule. As of August 7, HD KSOE has taken orders for 146 new vessels worth about US$16.56 billion, achieving 122.6% of its annual order target of US$13.5 billion.