South Korea’s three major shipbuilding giants HD Hyundai, Hanwha Ocean and Samsung Heavy Industries claimed that they will continue to extend their order- selection strategy in order to win more high value-added orders. The South Korean shipbuilding industry believes that South Korean shipbuilders are currently in a boom period and will not lose money even if they miss out on low-cost bulk orders.
In the latest industry news, German shipping giant Hapag-Lloyd has ramped up its orderbook for liquefied natural gas (LNG) dual-fuel containerships to 30 ships, up from 24 at the start. Including option orders, the total value of the 30 new ships has reached $5.25 billion, making it one of the largest container ship orders in history.
Hapag-Lloyd’s fleet expansion program will add 393,000 TEUs and strengthen its position as the world’s fifth largest container shipping line.
The shipbuilding program attracted bids from a number of shipyards, including Jiangnan Shipyard, Waigaoqiao Shipbuilding, Dalian Shipbuilding Industry Corporation(DSIC), Guangzhou Shipbuilding International (GSI), New Times Shipbuilding, Yangzijiang Shipbuilding, as well as South Korea’s HD Hyundai Heavy Industries and Hanwha Ocean. Finally, two private Chinese shipbuilders, New Times Shipbuilding and Yangzijiang Shipbuilding, succeeded in their bidding with competitive prices.
According to shipbroker Intermodal, Hapag-Lloyd has signed a contract with Yangzijiang Shipbuilding for the construction of 10+5 17,000 TEU LNG dual-fuel containerships at a cost of about $210 million each, plus options, with a total value of about $3.15 billion.
In addition, it signed a contract with New Times Shipbuilding for the construction of 10+5 9,200 TEU LNG dual-fuel containerships at a cost of about $1.4 million each, plus options, with a total value of about $2.1 billion. the total value of the 2 types and 30 new ships reaches $5.25 billion.
For this result, the South Korean media believe that South Korean shipbuilders participating in the bidding need not feel sorry for this. The reason is that “the 17,000 TEU and 9,200 TEU containerships ordered by Hapag-Lloyd are classified by the Korean shipbuilding industry as small, low-cost ships. Meanwhile, due to the shipyard capacity constraints, if a large number of orders are signed at once, it will not be able to obtain more orders for other high value-added ships, which is not affordable to South Korean shipbuilders”.
South Korea’s shipbuilding industry related personnel said: “the industry has news that South Korea’s shipbuilding has been overtaken by China, but this is not the case. Korea shipbuilders such as HD Hyundai Heavy Industries and Hanwha Ocean are just going through the motions when they bid for Hapag-Lloyd’s newbuilding project. Hapag-Lloyd’s order quantity reaches 30 ships, South Korean shipbuildiers can not afford such a scale of batch orders, while at the same time, with the current market price, it is right not to accept orders for low-priced ships.”
Korean media reports that South Korean shipbuilders are looking to improve their profits through order- selection strategies, especially for high-value-added ships such as LNG carriers, Very Large Crude Carriers (VLCCs), and Ultra Large Container Ships (22,000TEU-24,000TEU). As of the end of September, the newbuilding price of 174,000 cbm class LNG carriers was $261.5 million; the newbuilding price of VLCCs was $129 million; and the newbuilding price of ultra-large containerships was $273.5 million.
Notably, this newbuilding program will be Hapag-Lloyd’s first containership order as owner in three years. Hapag-Lloyd last placed an order dating back to December 2020 for 6+6 23,500 TEU LNG dual-fuel containerships with then Daewoo Shipbuilding & Marine Engineering (DSME), with six options effective June 2021, at a reported cost of around $165 million each.
