South Korea’s leading sea carrier Hyundai Merchant Marine Co. (HMM) has signed a financial contract with Korea Shipping and Maritime Transportation to build five 300,000-ton very large crude carriers (VLCCs), said a report in Business Korea.
HMM has secured $420 million (470 billion won) through a state shipbuilding subsidy funding program, it said. The order has already been placed with local shipyard Daewoo Shipbuilding and Marine Engineering (DSME) September last year.
The financial support program consists of 60 percent of unsubordinated investment and 40 percent of subordinated investment. HMM participated in subordinated investment with 47 billion won (US$43.56 million), 10 percent of the total shipbuilding contracted price.
According to the report, the five VLCCs will be delivered to HMM, starting from the first half of 2019. HMM has already completed 190 billion won (US$176.09 million) worth of the long-term shipping contract for two out of the five for five years.
Two of HMM’s new five VLCCs are already under construction, and HMM will be using them to carry crude oil for GS Caltex for five years at around 190 billion won, said a Pulse News report.
The shipping company expects profits from its new fleet as the cost for building a new VLCC is at its lowest since 2003. Tankers also are less volatile than container ships. The rest of HMM’s vessels are scheduled to be delivered from the first half of 2019, it said.