Biggest container ship: Cosco Europe, the biggest container ship ever built in local dockyards was delivered Tuesday by Hyundai Heavy Industries to its Chinese client, Cosco. The ship will cruise at 48 kilometers per hour and is capable of carrying 1.2 million 29-inch television sets. The ship is 45.6 meters wide and 334 meters long. / Courtesy of Hyundai Heavy Industries

By Kim Yoo-chul
Staff Reporter

Despite the rapid growth of Chinese shipbuilders, South Korean shipbuilders are expected to post another record year in 2008 thanks to increasing demand for valued-added ships and high oil prices.

Some experts say mounting expectation for an active partnership with North Korea will partly help local shipbuilders find ``next overseas markets’’ as they are expanding offshore investments for future growth.

``Basically, there is no concern in the industry for 2008 as top local players have already secured enough orders to keep them busy for the next four years,’’ said Ohk Hyo-won, an analyst at Hyundai Securities.

``What’s impressive is that local shipbuilders are steadily winning orders for profitable large container and bulk ships, LNG carriers, drill ships and oil exploration facilities,’’ said Lee Seung-woo, an analyst at Shinyoung Securities.

According to industry sources, South Korean shipyards including Hyundai Heavy Industries, Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering (DSME) forecast their combined exports to exceed over $30 billion in the New Year, up from $26 billion in 2007.

Experts, however, warn of oversupply in the industry stemming from massive expansion by Chinese shipbuilders.

According to industry reports, the global shipbuilding output would amount to 50 million CGT (compensated gross tons) in 2010, up 63 percent in 2007. In contrast, demand is forecast to remain at 20 and 30 million CGT in 2010.

The specter of recession in the global economy, spurred by the U.S. subprime mortgage crisis, is cited as another negative factor hampering South Korean shipbuilders.

Doubts about the economic viability of the proposed plan to build a joint shipbuilding complex in North Korea could serve as another potential risk for shipbuilders that have reportedly been preparing for massive investment there.

North Korea’s shipbuilding capacity stood at a meager 258,000 tons in 2004, about 3.1 percent of the South’s 8.24 million tons in the same year, according to a report from the Korea Development Bank. There are eight shipyards in North Korea, including Wonsan and Najin. Total employees in the industry were 25,000, according to the report.

``We are engaged in talks to create a block plant in the North’s city of Anbyeon,’’ a DSME official told The Korea Times Tuesday. DSME recently unveiled a bold plan to build the $150 million plant in the reclusive North.

``The block plant, if completed, will produce components for repairing vessels, which does not bring huge benefits,’’ Ahn Ji-hyun from NH Securities said.

yckim@koreatimes.co.kr