Korean shipyards set to win mega deal: report

Two South Korean shipbuilders — Samsung Heavy Industries Co. and Daewoo Shipbuilding & Marine Engineering Co. — are expected to win a combined $1.5 billion deal, industry sources said Wednesday.

According to industry tracker TradeWinds, the Mediterranean Shipping Co. is working on an order for up to 11 container vessels.

MSC is close to a deal with Samsung Heavy for up to six 22,000-TEU vessels and is expected to turn to Daewoo Shipbuilding for a further five, the report said.

The deals, if clinched, will help local shipyards struggling to win more shipbuilding deals.

Entering this year, local shipyards have bagged more new orders than expected but recently have suffered a setback in securing more contracts.

South Korean shipbuilders have been under severe financial strain since the 2008 global economic crisis, which sent new orders tumbling amid a glut of vessels and tougher competition from Chinese rivals.

The country’s top three shipyards suffered a combined operating loss of 8.5 trillion won in 2015. The loss was due largely to increased costs stemming from a delay in the construction of offshore facilities and an industrywide slump, with Daewoo Shipbuilding alone posting a 5.5 trillion-won loss.

In 2016, Hyundai Heavy managed to post profits, but the other two suffered losses.
Source: Yonhap