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KSOE Reports Strong Start to 2022 as Koreans Fall to Second in 2021

Korean shipbuilding orders
Hyundai is tarketing 19 percent growth in orders for 2022 0ver its 2021 target (file photo)

Published Jan 4, 2022 8:58 PM by The Maritime Executive

The South Korean shipbuilding industry is off to a strong start with the largest company reporting nearly $1.4 billion orders in the first days of 2022. The year ahead could be a pivotal time for the South Korean industry with the European Union due to announce its long-delayed decision on the acquisition of Daewoo Shipbuilding by Hyundai Heavy Industries while the mid-sized shipbuilders were acquired by private investors, and the government plans new initiatives to drive the growth of the industry.

The Korean industry reported strong results for 2021, highlighting its focus on “high value” shipbuilding. According to Clarkson Research Service, the South Korean shipbuilders received 403 orders in the year for a combined total of 17.35 million tons. However, it represented just 38 percent of the total orders for the year putting the Koreans in second place for orders behind Chinese shipbuilders for the first time since 2017. 

Korea Shipbuilding & Offshore Engineering Co. reported in a filing, however, that it has received $1.39 billion worth of orders since the start of 2022 just four days ago. The figure represents the combined total for orders that included six 15,000 TEU containerships that will be powered by LNG, as well as three smaller feeder containerships for a second customer.  In addition, KSOE said it also received an order for an LNG carrier for an Asian customer. These vessels are due for delivery in 2023 and 2024 adding to KSOE’s already large orderbook from 2021.

Korea’s Yonhap news agency calculates that KSOE received orders totaling $22.08 billion in 2021. DSME reported $10.86 billion in orders. In early December, Korea’s other large shipbuilder, Samsung Heavy Industries, reported that it had already won orders worth a cumulative $11.8 billion for the year, exceeding by 30 percent its annual order target of $9.1 billion. Korea’s mid-sized shipyards also benefited from the strong market. Even STX, which had years of financial difficulties, was able to double its orderbook with a contract to build 12 new tankers that came in shortly before the company was sold to new investors and renamed K Shipbuilding.

The Korean government announced plans for a major initiative to drive the growth of the shipbuilding industry focusing on high-value ships. They hope to add at least $4 billion in sales from a green shipping initiative. KSOE kicked off the new year by also announcing its targets for 2022. Korea’s largest shipbuilder reported it is targeting 19 percent growth in the value of orders or more than $17 billion in 2022 up from its target of $14.9 billion for 2021. 

Most analysts agree that while 2022 is likely to be another strong year for orders it will not match the dramatic growth seen in 2021. While shipowners need to expand capacity, they also are hesitant while they await decisions from the IMO and regulators on environmental policies as well as awaiting new technologies that will future-proof their investments in new ships.