Can pain in the China's ship building industry the gain for South Korea? Will 2015 save Korea's major shipbuilders which had a pretty tough time in 2014?
Korea's major shipbuilders had a pretty tough time in 2014. Out of the country's three major players, only Daewoo Shipbuilding & Marine Engineering hit its order target last year. It received orders for 68 ships and an offshore plant.
Korea's other major players, Hyundai Heavy Industries and Samsung Heavy Industries, both failed to hit their targets. Market experts partly attribute last year's weak performance to falling global oil prices, which negatively affected demand for offshore plants and drill ships.
Tough competition from China and Japan also posed a threat to the nation's shipbuilders.
However, Bloomberg reports that China is poised to lose its title as the world’s biggest shipbuilding nation to South Korea for the first time in five years as several shipyards from Dalian to Guangzhou lay idle while others exit the industry amid a slump in orders.
The delivery of vessels from Chinese shipyards reached 10.73 million compensated gross tons, a measure of building time and human resources used per ton, in the first 11 months of this year, according to Clarkson Plc. That’s less than the 11.13 million tons from South Korea, which is poised to take the top slot for the first time since 2009. China is still the world’s No. 2.
The downfall of the Chinese shipbuilding industry has become more evident with the drop in deliveries comes as orders are falling, even as the backlog is increasing. This means shipowners are refusing to take the vessels and shipyards are failing to meet delivery deadlines.
Can Korea tap this opportunity is a billion dollar question.