South Korea’s Shipbuilding Sector Soars to Record Highs

Samsung Heavy Industries Secures Largest Order in Company’s History Amidst Industry Rebound


South Korea’s shipbuilding industry is experiencing a notable resurgence, exemplified by Samsung Heavy Industries (SHI), the second-largest shipbuilding company in the nation, announcing the signing of the largest order in its history. This resurgence is indicative of a strong start to 2024 and a marked improvement in financial performance across the sector.

The recently secured order by SHI comprises 15 new LNG carriers, each boasting a capacity of 170,400 cubic meters. Scheduled for delivery by October 2028, this order ensures consistent work for the next five years. Although the identity of the buyer has not been officially disclosed, SHI has hinted that it is a “Middle East shipowner,” strongly indicating the involvement of QatarEnergy. Negotiations for this order commenced in October 2023, building upon a slot reservation from QatarEnergy dating back to 2020.

Valued at approximately $3.4 billion, this contract surpasses SHI’s previous record order received in July 2023 from Evergreen for 16 methanol-fueled containerships valued at around $3 billion. Notably, the largest order ever received by South Korean shipbuilders was granted to HD Hyundai in October 2023 for 17 LNG carriers, amounting to $3.9 billion, and securing work for HD Hyundai until 2029.

This recent development underscores QatarEnergy’s long-term expansion program, closely tied to the development of the new North Field. In tandem with QatarEnergy’s initiatives, SHI’s order book for 2024 has already seen significant growth, with 17 ships valued at $3.7 billion secured within the first weeks of the year. This represents nearly half of its entire order book for 2023, demonstrating a robust trajectory for the company.

In a similar vein, rival HD Korea Shipbuilding & Offshore Engineering (KSOE) has reported a strong start to 2024, potentially necessitating a revision of its annual forecast. Having contracted 38 ships valued at $4.65 billion within the initial weeks of the year, KSOE has already achieved a third of its annual forecast, which stands at $13.5 billion.

Despite economic concerns and industry outlook uncertainties, KSOE’s strategic focus on emerging segments, such as large ammonia carriers, has contributed significantly to its growth. With a notable shift to profitability, KSOE recorded a net profit of $109 million for the full year 2023, marking a substantial improvement from the preceding year’s loss.

While challenges persist, including a fourth-quarter net loss of $67 million for KSOE, the overall trajectory of the South Korean shipbuilding industry remains positive. As industry players continue to adapt to evolving market dynamics, there is a collective anticipation that a strategic emphasis on profitability in order selection will further drive the industry forward. Despite rumors suggesting a shift away from containership orders, industry leaders like Hanwha Ocean remain committed to navigating the evolving landscape while maximizing profitability opportunities.


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