After receiving $3.648 billion in new shipbuilding orders in 2023, HD Hyundai Mipo, the shipbuilding subsidiary of South Korea’s largest shipbuilding conglomerate HD Hyundai Group, announced earlier this year that it had lowered its full-year order target to $3.1 billion and made it clear that it would continue to implement its order-selecting strategy to improve profitability.
The Korea Financial Supervisory Commission’s electronic disclosure system on April 8 showed that HD Hyundai Mipo has taken orders for 44 new ships worth $2.7 billion this year, achieving 87% of its $3.1 billion annual order target, with only $400 million left to reach the target. If the shipyard continues to win orders in April, it is likely to meet its annual target this month.
On January 9th, Pertamina International Shipping (PIS), the shipping subsidiary of Pertamina, signed a construction contract with HD Hyundai Mipo for 15 50,000 DWT MR product tankers valued at USD 720 million, which is the first order of HD Hyundai Mipo in the beginning of the year. Up to now, HD Hyundai Mipo has received orders for 32 new ships in the product tanker market alone, proving once again its competitiveness in the market. In addition, the shipbuilder has also received orders for eight medium-sized liquefied petroleum gas (LPG) carriers, two liquefied carbon dioxide carriers and two car carriers.
Compared with last year, HD Hyundai Mipo took orders at a substantially higher rate. In the first half of last year, the shipbuilder took orders for 46 new ships valued at US$2.445 billion, while the number of ships so far this year has decreased by two, but the cumulative value of orders has already exceeded last year’s first-half performance. This is due to the order selection strategy as well as the continued rise in ship prices.
Last Wednesday (April 3), HD Hyundai Mipo signed an order for four 50,000 dwt MR product tankers with South Korea’s Pan Ocean Shipping Co Ltd (Pan Ocean), with a unit cost of up to $51.76 million. This is the first time in 16 years that the price of a new MR product tanker has exceeded $50 million, Clarkson said.The market price of MR product tankers peaked at $53.5 million in September 2008, but has been on a downward trend since the global financial crisis and sharp economic downturn. Compared with the cost of similar PCTCs to be undertaken by HD Hyundai Samho in September 2022 ($119.5 million), it is 12.1% higher.
Previously, Hyundai Glovis, the shipping and logistics arm of South Korean automotive giant Hyundai Motor Group, entered into force with Shanghai Waigaoqiao Shipbuilding (SWS) and Guangzhou Shipbuilding International (GSI) respectively for two 10,800 ceu LNG dual-fuel PCTCs at a unit cost of US$122 million. As the world’s first 10,800 ceu LNG dual-fuel PCTCs, their unit cost is $12 million lower than that of the 7,500 ceu LNG dual-fuel PCTCs undertaken by HD Hyundai Mipo. According to Clarkson’s latest data, the current market price for a 7,000 ceu PCTC is $97 million.
With the increase in the order book of the main types of ships received and the order selection strategy focusing on high value-added ships, HD Hyundai Mipo is positive about the improvement of this year’s performance. Last year, HD Hyundai Mipo reported an operating loss of KRW 152.9 billion on operating revenue of KRW 4.391 trillion and a net loss of KRW 13.9 billion. Revenue increased 7.8% year-on-year due to an increase in working days, but operating loss widened due to an increase in costs related to stabilized production as well as a provision for losses on the construction of some new ships.
This year, HD Hyundai Mipo is expected to turn a profit with the mass construction of its flagship high-productivity ships and the easing of labor shortages that had previously plagued the Korean shipbuilding industry. Once the conclusion of negotiations with shipowners who have asked to terminate their contracts due to financial difficulties, the construction loss provision will also be reflected in operating profit.
HD Korea Shipbuilding & Offshore Engineering (HD KSOE) said, “HD Hyundai Mipo expects to stabilize productivity by significantly reducing costs in the second quarter of this year and will not incur any expenses for this purpose from the second half of the year. Among HD KSOE’s shipbuilding subsidiaries, HD Hyundai Mipo has been relatively slow to make profits, but is expected to have the largest improvement in performance.”