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Korean Shipyards Continue Lead in Orders as STX Creditors Invite Bids

Korean shipbuilders lead new orders
(file photo)

By The Maritime Executive 11-10-2020 06:37:09

The South Korean shipbuilding industry received the largest volume of new orders for the fourth straight month as the global shipbuilding industry continues to struggle with a steep downturn in orders in 2020.

The Korean news agency Yonhap cites data from market researcher Clarkson that collectively the South Korean yards received more than two-thirds of the total orders during October. In total, the Clarkson data cited by Yonhap says just over 1 million compensated gross tons (CGTs) were ordered.

While the South Korean yards have been hard-pressed to meet targets for their business in 2020 and many as a result have taken steps to reduce capacity, they nonetheless continue to record significant orders. In recent weeks the yards have received several large orders, especially for LNG carriers and tankers as well as growing entry into the offshore wind sector.

One Korean shipbuilder, Daewoo Shipbuilding & Marine Engineering recently reported that due to the strength of orders in the second half that it expected to meet its annual order target. Among the orders that they pointed to contributing to their outlook, and Korea’s overall performance in shipbuilding was a recent order for a Very Large Gas Carrier (VLGC) with an option for a second vessel.

Chinese shipbuilders, who historically have led the industry in orders, remained in second place behind their Korean rivals in October. The Chinese yards received approximately a quarter of the total orders in the month.

For the first ten months of 2020, the Clarkson data showed a nearly 50 percent decline in newbuilding orders based on tonnage.  Nearly half of the orders have gone to Chinese shipbuilders with the Korean yards received approximately a third of the orders or just under four million CGT. The Japanese shipyards remain in third place with just over one million CGT ordered in 2020.

The total tonnage on order worldwide, however, declined by approximate on percent in October versus the year ago. While the global order book has been declining since the beginning of 2020, the Korean shipbuilders reported a two percent increase in their order backlog due to the strength of recent orders.

While the overall Korean shipbuilding industry highlighted its positive performance, one of the one-time leaders, STX Offshore & Shipbuilding, confirmed on Monday that its creditors invited bids of the shipyard. Creditors led by the Korea Development Bank (KDB) invited bids for their shares in the yard gained during a series of restructuring of the operation.

KDB accepted in the spring of 2018 STX's self-rescue plan and withdrawn its plan to put the yard under court receivership. The yard had filed for court receivership in May 2016, but by mid-2017 made progress in its economic recovery plan managing to meet its debt payment schedule. Founded in 1967, the shipbuilding group had grown to include international operations, but was later forced to downsize through a series of restructuring that by the summer of 2020 had seen the workforce shrink to just 500 employees. During the summer, STX reported that it had just seven ships in its order book. Workers have been forced at times to accept unpaid leave prompting the workers to go on strike this spring.

Bids for STX are due by November 23 with speculation in the Korean media that an equity investment firm might take an interest or that the remaining assets could be dived if preliminary bids did not materialize as expected.