Hyundai Merchant becomes savior of struggling shipbuilders

//Hyundai Merchant becomes savior of struggling shipbuilders

Hyundai Merchant becomes savior of struggling shipbuilders

Hyundai Merchant Marine’s (HMM) plan to order 20 container carriers is expected to breathe fresh air into the county’s ailing shipbuilding industry.

According to sources in the shipbuilding industry, the country’s top three shipbuilders _ Daewoo Shipbuilding and Marine Engineering (DSME), Samsung Heavy Industries (SHI) and Hyundai Heavy Industries (HHI) _ are preparing to win orders from Hyundai Merchant Marine.

The country’s leading sea carrier said recently it sent local shipbuilders a request for proposal (RFP), to order 12 20,000 twenty-foot equivalent unit (TEU) container vessels as well as eight 14,000 TEU carriers. If the shipbuilders participate in the bidding, suggesting a price and deadline, the shipper will select a shipbuilder and sign a letter of intent. As the deadline will be tight, it is expected the shipping company will distribute the orders for the 20 ships among the top shipbuilders.

Analysts say the massive HMM order, the first in seven years, will help local shipbuilders that have been going through restructuring. The shipping company needs new ships as it has to prepare for stricter environmental regulations of the International Maritime Organization that will take effect in 2020. As it is scheduled to lower down the maximum sulfur content of bunker fuel oil to 0.5 percent from the current 3.5 percent, shipping companies will have to either get new ships using liquefied natural gas (LNG) or install equipment called “scrubbers” that reduce sulfur. HMM plans to deploy the 12 20,000 TEU ships to its Asia-North Europe route, while the eight 14,000 TEU ships will be navigating the east coast of the United States.

HHI closed at 129,000 won in the stock market Thursday, up 2.38 percent from the previous day. DSME gained 3.75 percent, while SHI inched down 0.26 percent.

“It will definitely be good news for the shipbuilders,” said Yoo Seung-woo, an analyst at SK Securities.

“Of course, it would have been better if domestic shipbuilders received orders from global shippers. Korean shipbuilders had their position in the global container market shaken as a Chinese shipbuilder won CMA CGM’s order last August. However, they would be more than glad over HMM’s order since they have been going through intensive restructuring due to slower-than-expected recovery in orders.”

HHI, for instance, had announced it will implement a voluntary retirement program once again due to shortage of orders. Its employees have also been taking leaves of absence in turns. Its shipyard in Gunsan, North Jeolla Province, has stopped operation due to lack of orders.

SHI has also been implementing leave-of-absence programs among employees, as two of its eight docks in its Geoje shipyard are empty.

Source: Hellenic Shipping News.

By | 2018-04-13T04:09:37+00:00 April 13th, 2018|News|0 Comments

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