While South Korean small-and-medium size shipyards are facing troubles with lack of orders and financial difficulties, this may eventually reinforce competitiveness of Chinese yards and damage Korean shipbuilding industry, a senior analyst says.
Senior researcher Yang Jong-Seo, KEXIM (The Export-Import Bank of Korea) Overseas Economic Research Institute, emphasized in a report titled '2012 Q1 small-and-medium size shipbuilding industries market trend' on May 3, "The government, industries and financial institutes should cooperate together to maintain and develop small-and-medium size shipbuilding industries."
According to the report, Korean small-and-medium size shipyards (those construct export steel ships, excluding Hyundai, Daewoo, Samsung, Hyundai Mipo, Hyundai Samho, STX O&S and Hanjin) only contracted overall 35,000 cgt in the first quarter this year, down by 95.7% year-on-year.
Contract value totals $67m, down by 94.5%. Only a pair of MR tankers have been booked, in other words, new order activity is almost suspended in practical.
Due to rapid decrease in new order, small-and-medium yards secure 4.67m-cgt order on the book as of the end of first quarter, down by 13% on the end of previous quarter.
On the basis of those yards now in operation, it covers only 1.6 years and only three yards have schedules covering over one year.
S&M yards' delivery in Q1 declined by 16.8% to 2.01m dwt.
Korean small-and-medium size yards should concentrate on tanker sales as a revitalization measure, researcher Yang pointed out. Also, he added that comprehensive support measures and reorganization of new order strategy are needed.
He said, "If Korean small-and-medium shipbuilding industries lose competitiveness, China would monopolize smaller ships, which prompts growth of Chinese shipbuilding industry, in the end."
Added, "In order to rehabilitate small-and-medium shipbuilding industries and stand up to China, government, industries, financial institutes' synthetic and practical supports are urgently demanded."