Shipbuilders fail to win new contracts in January

The Korean shipbuilding business continued to struggle in January.

According to industry data on Tuesday, the nation’s top three shipbuilders - Hyundai Heavy Industries (HHI), Daewoo Shipbuilding and Marine Engineering (DSME) and Samsung Heavy Industries - failed to win any new contracts last month.

It was the first month in history all three failed to do so.

By the end of January 2015, the three companies had won about $1.8 billion won in contracts, including projects to build LNG carriers and oil tankers.

“January is generally considered an off-season for shipbuilders but it’s the first time that even the top three companies failed to win a new project,” said a spokesman for the Korea Offshore & Shipbuilding Association. “Due to global slump in the industry, it is hard to find major businesses that want to place orders.”

One of the biggest reasons for the slump is the low international oil prices. Impacted by the downturn, most major clients - including Maersk - are not placing many new orders lately and have been carrying out large-scale restructurings.

Another reason is that those clients already placed their orders last year to avoid new regulations on emissions ratings that went into effect last month. Korean companies also are having trouble winning contracts to build small to mid-size vessels, as Chinese companies have started to aggressively expand their share in the sector by offering relatively cheaper prices.

Under the circumstances, it is unclear whether or not Korean shipbuilders will be able to improve their situation this year.

“It is true, we weren’t able to win any new contract last month,” said a spokesman for DSME. “We will focus on improving the company’s overall profitability by handing over the ships we are currently building on time.”

BY KWON SANG-SOO [kwon.sangsoo@joongang.co.kr]