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Korean Shipbuilders Showing Some Recovery with VLCCs

Korean Shipbuilders

VLCC of Samsung Heavy Industries

Korean shipbuilders are signing a series of very large crude oil carrier (VLCC) contracts. According to Clarkson Research, a total of 12 VLCC orders were placed in the first quarter of this year whereas the number had been 14 in the entire year of 2016. “Hyundai Heavy Industries signed 18 contracts, worth US$1.6 billion in total, this year and half of them are VLCC contracts,” said a local industry source, adding, “The same trend is being witnessed in the other South Korean shipbuilders as well.”

Hyundai Heavy Industries recently clinched four VLCC contracts from Flontline, the largest oil tanker operator in the world. The total value of the contracts including two as options is US$320 million. The VLCCs are slated to be built by Hyundai Samho Heavy Industries before delivery scheduled for 2019.

Samsung Heavy Industries recently signed a letter of intent with Capital Maritime in Greece to build up to eight VLCCs, including four as options. Although the final contract has yet to be signed, the total value is estimated at US$650 million.

Earlier, Samsung Heavy Industries obtained four VLCC orders from BW in Singapore, returning to the market for the first time in five years. The orders in Singapore have a total value of US$334.79 million and the ships are planned to be delivered by July 2019.

Daewoo Shipbuilding & Marine Engineering signed three contracts for VLCCs with a capacity of 318,000 tons, worth US$250 million, with Maran Tankers, which is a subsidiary of Angelicoussis Group. Last month, it inked a letter of intent with Hyundai Merchant Marine for up to 10 VLCCs.

In the meantime, an increasing number of shipowners are placing new VLCC orders these days with the prices of the ships falling. According to data from Clarkson Research, the newbuilding price fell to approximately US$80 million, a 14-year low, in late March this year. Under the circumstances, shipowners are looking to replace their ships that have been in operation for more than 15 years. In addition, the number of new orders is on the increase as oil prices rebound and new oil refining facilities are put into operation in Southeast Asia.

The Original Posted by Jung Min-hee/Business Korea

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