As newbuilding prices worldwide continue to decline, Korea’s major shipyards turned out to have won so many less profitable orders. In other words, even if they succeed in getting new orders, they barely gain profits from these orders.
Another factor behind the deterioration of their profitability is that their restructuring efforts are focused heavily on white-collar workers, thereby making it difficult for them to escape from the high-cost structure.
According to Britain’s shipping and shipbuilding analysis firm Clarkson on April 6, the average newbuilding price for a very-large crude carrier stood at US$80 million at the end of last month, down by $1 million from a month ago. This figure is the lowest in 14 years.
After surging to $160 million in 2008 from $70 million in 2003, the newbuilding price of a VLCC, a segment in which Korean shipyards established a dominant presence, has been on a downward trend thereafter primarily due to market oversupply.
Recently, a large shipyard received a VLCC order from a European shipowner at a price of $79 million apiece.
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