Shipbuilding contracts up $20 billion year on year

Korea, the world’s biggest shipbuilding country, received record orders for vessels in the second quarter, helped by increased demand for ships to carry containers, iron ore and coal.
New contracts swelled to $20.9 billion from $9.9 billion a year earlier, the Ministry of Commerce, Industry and Energy said in an e-mailed statement yesterday. The backlog rose to $121.6 billion, which will keep the dockyards busy for the next four years, the statement said.
Hyundai Heavy Industries Co., Samsung Heavy Industries Co. and Daewoo Shipbuilding & Marine Engineering Co., the world’s biggest shipyards, may post record earnings this year as they book more business at record prices.
Expanding commerce between China and the U.S. and Europe is prompting shipping lines to buy more vessels. About 90 percent of global trade is done by sea.
“The strong demand for new vessels should continue at least for the next two to three years, even if growth in new orders slows,” said Jeong Dong-ik, an analyst at CJ Investment & Securities Co.
“Crude carriers and LNG tankers will lift new orders at the shipyards in the second half together with continued strength in bulk carriers.”
Tankers for LNG, or liquefied natural gas, are among the largest and most complex cargo ships. The nine shipbuilders won orders for 121 container carriers during the first half, more than the 119 for all of last year, and they booked contracts for 55 bulk carriers, compared with none in the previous two years, the statement said.
New orders in the April to June quarter rose to 6.9 million compensated gross tons from 4.7 million a year earlier.
Compensated gross tons are a measure of ship size, and the time and materials required for production.
The yards built $5.1 billion of vessels representing 2.4 million compensated gross tons in the second quarter, compared with $4.6 billion for 2.9 million a year earlier, the ministry said.
First-half orders at the shipbuilders also rose to a record of $33.2 billion for 364 vessels, 51 percent more than a year earlier, the statement said. Volumes rose 38 percent to 11.32 million compensated gross tons, the statement said.
The unit price for new shipbuilding rose 28 percent to $2,933 per compensated gross ton during the first half as shipbuilders passed higher costs for steel plate onto the new contracts, according to the statement. Steel plate is used to make hulls.
Bloomberg