A late-year bonanza of orders for LNG carriers landing at South Korea’s shipyards may be partially threatened by industrial unrest, after a strike at Daewoo Shipbuilding & Marine Engineering affected operations this week
Industrial action at a South Korean shipyard may jeopardise recent LNG carrier orders. Two workers effectively took a 40-m high dock crane out of action at Daewoo Shipbuilding & Marine Engineering (DSME) after they scaled it in protest at pay, as the yard, which was bailed out by the government, attempts to slash salaries in a cost-cutting drive.
The timing of the action is unfortunate because in December DSME and other South Korean shipyards booked a string of plum contracts for LNG tankers. In the first two weeks of December alone, the shipyards locked up a dozen new orders, including one for South Korea’s first mid-size carrier suitable for the region’s typically shallow-water ports, in a multi-billion-dollar statement of the country’s expertise in LNG-powered vessels.
At last count, Hyundai Heavy Industries (HHI) had bagged four orders worth US$740M in December, bringing its total order book for the year to US$12.4Bn. That puts the company within striking distance of its full-year target, for which HHI now only has to win two more orders before the end of the year.
In the same period, Hyundai Samho Heavy Industries signed a contract for two 174,000 m3 tankers valued at US$370M for an Asian customer – that followed another order for two LNG carriers from a Greek client.
Meantime, Hyundai Mipo Dockyard booked a contract for a mid-sized, 30,000 m3 carrier priced at US$77M. The vessel, which is scheduled for delivery to Norway’s Knutsen by Q1 2021, also comes with the option of a second carrier.
And strike-hit DSME announced earlier this week that it had won an order for a single carrier for a Greek owner, bringing its order book for 2018 up to US$6.2Bn, about 15% shy of its full-year target. DSME had already unveiled a week earlier a US$370M deal for two carriers for an American shipping group, plus an option for four more vessels.
Finally, Samsung Heavy Industries (SHI) has agreed the construction of two LNG tankers for an Asian shipping company. Valued at US$357M, the order brings SHI’s order book for the year to US$5.4Bn, roughly two thirds of its 2018 target.
South Korea’s packed order book is seen as a direct result of LNG production rates that defy all forecasts, as demand for the gas grows rapidly across Asia. If the country’s shipyards continue to book more construction contracts, South Korea could threaten China’s position as the premier builder of LNG carriers.