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| An LNG carrier built by Hyundai Heavy Industries / Courtesy of Korea Shipbuilding & Offshore Engineering |
By Nam Hyun-woo
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| Korea Shipbuilding & Offshore Engineering CEO Ka Sam-hyun |
According to KSOE, Monday, CEO Ka Sam-hyun said the company is anticipating to break above $14.9 billion in new orders this year, during a conference with analysts last week, casting a favorable outlook on shipbuilding prices and orders.
"Following the U.S. government's investments, the demand for eco-friendly vessels is growing, while the global shipping volume is expected to grow, buoyed by increasing Asia-America trade," Ka said. "Given the solid recovery of orders at the end of last year, this year's orders may surpass our current estimation."
Since December, KSOE has been enjoying a robust rise in its backlog, bagging orders for 22 vessels in December. In January, KSOE affiliates have won orders worth 1.3 trillion won ($1.17 billion) to build 11 vessels, keeping the momentum solid.
Ka noted Clarksons Research's anticipation that the global shipbuilding orders this year will grow 22 percent year-on-year to stand at 43.4 million gross tonnage.
KSOE said it is hard to estimate short-term sharp growth in orders, but noted that chances are high for the firm to meet this year's target, given the growth trajectory in shipbuilding prices and anticipated orders from Greek shippers.
"Following the solid orders in the fourth quarter, domestic shipbuilders no longer have to win orders at low prices," Ka said. "Along with the pressure from exchange rates, there are pressures from the rising costs of raw materials such as plates. It is time to expect a natural hike in shipbuilding prices and we expect noticeable price improvements in the second half of this year."
Ka also said the fourth quarter of last year was the bottom of a micro cycle, which refers to a three- to five-year period, and it is good timing for shippers to order new vessels as the current shipbuilding prices are low and demand is increasing.
"Shippers with abundant cash, especially those in Greece, usually show movements to secure new vessels in this period," Ka said, adding orders will improve all across different vessel types. "When the COVID-19 situation gets stabilized, further recovery will be available."
Over the Qatar Petroleum LNG project, Ka expected a one-year delay in vessel orders due to the pandemic, thus KSOE will likely bag orders for five to 10 vessels this year.
Last year, Qatar Petroleum signed an agreement with domestic shipbuilders on booking shipbuilding slots for more than 100 LNG vessels by 2027, as part of the Qatari firm's plan to raise its LNG production capacity from 77 million tons a year to 110 million tons a year by 2025 and to 126 million tons by 2027. Initially, approximately 20 to 30 vessels were anticipated to be ordered from this year, but the project appears to be suffering a delay due to COVID-19, industry officials said.
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