Hyundai Heavy Industries President Ka Sam-hyun said, “The largest-ever group of people have converged on Nor-Shipping 2017 in which I attended, so I could sense that the shipbuilding and shipping markets are recovering.”
The biennial shipping trade fair that took place from May 30 to June 2 is one of the world’s largest shipbuilding and marine exhibitions along with the POSIDONIA in Greece and SMM in Hamburg, Germany.
President Ka returned home on June 4 after touring the Nor-Shipping 2017 in Norway, Russia, the U.K., Switzerland, and Luxemburg for 15 days from May 21. Ka began his career with HHI in 1982 and he was dispatched to the Korea Football Association in which he served as chief of the game operation headquarters of the 2002 Korea-Japan FIFA World Cup and the secretary general. In 2009, he returned to HHI and he was promoted to president in charge of the ship business last October.
A look at ship order inquiries indicates that the shipbuilding industry is entering a recovery stage after bottoming out, President Ka said. “Order inquiries coming in recently are equivalent to those of the high season,” he said.
As HHI won 22 very large crude carriers (CLCCs) at one time in May, he said, mega-orders are coming in frequently. A recent decline in shipbuilding orders, coupled with continued ship deliveries, has eased a ship glut, said President Ka, predicting that the shipbuilding industry is likely to rebound starting this year. Last year saw shipbuilding orders decline to a combined 18 million GT, equivalent to about one-tenth of the 169 million GT orders in 2007. The backlog of orders dropped from 340 million GT to 140 million GT during the period, in what the global shipbuilding industry dubbed as the “worst order cliff.”
President Ka said the market outlook for large-sized container ships, crude carriers, and LPG/LNG carriers, in which Korean shipbuilders have a competitive edge, are rosy. The ocean freight industry’s restructuring of alliances in April, being done every five years, is creating a new demand for VLCCs, he said. Sings of a rebound can be felt as a demand rises for LPG/LNG carriers with a focus on small-sized ones.
The boom the global shipbuilding industry enjoyed in 2013 is unlikely to be repeated, however, business sources said.
In 2013, HHI raked orders worth $26.1 billion, but the shipbuilding giant saw orders decline to $5.9 billion last year. Korean shipbuilder are predicted to see sales in 2017 plunge about 30 percent compared to those in 2015, securities business sources said. President Ka also said the global shipbuilding industry is unlikely to see a repeat of the previous boom.
HHI is undergoing a restructuring with a focus on a reduction in manpower and facilities. In line with the restructuring, HHI decided to halt the operation of two shipyards at the Ulsan Shipyard. The Gunsan Shipyard is to suspend its operation starting July 1. HHI has also cut 3,500 employees.
HHI wants to reduce the marine plant business for crude oil and gas exploration structures, which was blamed for causing huge losses. In consideration of the business, which is forecast to rebound in 2019 or 2020, small-sized structure projects can be implemented starting this year, given a three-year construction period, and orders of large-sized ones are expected to come in early next year.
Even though the marine plant market shows signs of recovery, he said the shipbuilder faces such tasks as how to raise shipbuilding order prices in the long-term and improving productivity and profits. President Ka said HHI will accelerate efforts to reduce costs through the improving of engineering methods, restructuring and other means. The global shipbuilding and shipping market survey institution Clarksons said in a report issued in April that shipbuilding orders will surge 73 percent in 2017, compared to last year’s worst situation, and orders to build more than 1,000 ships will come in starting 2018 with the shipbuilding industry expected to recover 64 percent of the average 10-year shipbuilding orders in 2020.
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