STX Shipbuilding to Add Floating Dock, Increase Capacity by 20%

STX Shipbuilding Co., owner of Europe's largest shipyard, plans to raise capacity at its South Korean yards by 20 percent this year after adding a second floating dock to meet demand for new vessels. Yards in Busan and Jinhae will be able to handle 60 ships compared with 50 last year, Senior Vice President Kang Ssang Won told reporters during a visit to Jinhae on May 23. STX Shipbuilding said in March it would spend 142.6 billion won ($135 million) to build the new dock on the south coast. South Korean shipyards including STX Shipbuilding and biggest rival Hyundai Heavy Industries Co. are adding capacity to clear backlogs stretching to 2012. STX Shipbuilding, which took over Oslo-based Aker Yards ASA this month, started building vessels at a yard in China's Dalian port in April.
``We are trying to become a world leader in shipbuilding,'' Kang said. ``We want to be in markets where we believe there will be need for new vessels.''
STX Shipbuilding will focus on building Very Large Crude Carriers, the largest of their type, and vessels to carry liquefied natural gas at Jinhae, while focusing on smaller ships at Dalian. Parent STX Group plans to build floating oil platforms, drilling rigs and other offshore equipment in China, Lee Ki Yeon, executive vice president at unit STX Heavy Industries Co., said on May 23.
Overseas Expansion
STX Shipbuilding, along with associate companies STX Engine Co. and STX Heavy, is building a yard complex in Vietnam, the group's second Asian shipyard complex after Dalian. The yard in Vanphong, 440 kilometers (273 miles) east of the capital Hanoi, will cost the company $150 million.
Revenue from STX Group's shipbuilding businesses in South Korea, China and Aker Yards is forecast to reach about 25 trillion won by 2012, compared with about 13 trillion won estimated for this year, Shin Sang Ho, deputy president of STX Shipbuilding, said on May 23.
STX Heavy aims to make 240 engines this year, compared with 133 in 2007, and build annually 210,000 tons of blocks used to the make the hulls of vessels. It is working on a plan to build a block plant in Masan, 388 kilometers south of Seoul.
Still, shipyard shares in South Korea, the world's biggest shipbuilding nation, have declined this year on concern rising prices of raw materials including steel will erode profits and overcapacity caused by new entrants will lower demand. New rivals will find it more difficult to cope with higher raw material costs than established shipbuilders, Shin said.
Steelmakers are raising prices of steel plates as they pay as much as 71 percent more for iron ore and other key ingredients to make steel products. STX Shipbuilding plans to 700,000 tons of steel this year, 40 percent more than a year earlier.

Source: Bloomberg