October 16, 2008

Hyundai shipyards defy recession

Bloomberg reported that new orders for ships hauling raw materials to China and finished goods to the rest of the globe are helping Hyundai Heavy Industries Co, the world's biggest shipbuilder make the strongest start in six years.

Hyundai Heavy Industries has defied a US economic slowdown, recording USD 7 billion in contracts in the first two months of 2008, more than eight times the same period the year before. The orders are dispelling concern that the global credit crisis will force owners to slash ship purchases and may lead to a 35% profit gain for the 12 months ending December 31.

Shipping lines are paying about 47% more for vessels than a year earlier as economic growth in China has increased demand. Hyundai Heavy last month raised its 2008 order target by 9.7% to a record USD 29.4 billion because of better than expected sales of ships including tankers that can transport about 2 million barrels of crude oil.

According to London based shipbroker Clarkson Plc, South Korean shipbuilders, led by Hyundai Heavy, won almost half of the record USD 190.6 billion that owners spent last year for new vessels. It said that they won about 63% of global orders in the first two months of 2008.

Mr Park Chang Suk who manages the equivalent of USD 404 million, including Hyundai Heavy shares, at NH CA Asset Management Co in Seoul said that “South Korean shipyards will fare better than rivals elsewhere because of their competitiveness. I plan to continue to increase my holdings.''