Sungdong Shipbuilding Loses Last Orders

Loading out a new bulk carrier, Sungdong, 2015 (Sotirios C. Katsaras / video still)

By The Maritime Executive 05-15-2018 08:38:00

Midsize South Korean yard Sungdong Shipbuilding & Marine Engineering has lost its only remaining contracts, a series of five Aframax tankers for Kyklades Maritime. 

The Greek shipowner's decision comes as South Korean courts are assessing Sungdong's viability. A recent assessment found that the yard's liquidation value was much higher than its worth as a going concern, but in March, South Korea's government indicated that it wants to keep Sungdong open as a repair yard and a supplier of ship blocks. Sungdong has been under court receivership since April, and Deloitte Anjin will perform another assessment of Sungdong's prospects in order to recommend rehabilitation or liquidation.

Sungdong has been in business since 2001, and has been receiving various forms of state and private assistance since 2010, including $3.7 billion in funding from private banks and $1.9 billion from the state-run Korea Export-Import Bank (KEXIM). Now that the yard is under receivership, it is reportedly having difficulty securing export guarantees. 

Historically, Sungdong has been known for its midsize tankers and bulkers, vessel categories where low-cost Chinese yards have made significant gains in market share in recent years. Local elected officials in Gyeongnam province and the city of Tongyeoung, where the company is based, have suggested that a new global shipbuilding boom will soon lift shipbuilders like Sungdong. With the new global sulfur cap due to arrive in 2020 and the new ballast water management regulations coming into play, they have hopes that shipowners will soon be placing more orders for more modern vessels at South Korean yards.