New Ships Weekly Report

South Korean shipyards plan to buy 12 percent less steel plate this year as shipbuilding orders decline.

Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering and Samsung Heavy Industries will cut purchases to a combined 6.5 million tonnes from 7.4 million tonnes, according to company figures. The yards are the world’s biggest buyers of steel plate, which is used for making hulls and in construction. The shipbuilders, the world’s three largest, are building fewer oil tankers and container vessels as they focus on more profi table drilling ships and offshore units that generally need less steel. “Steelmakers are in for a tough year,” said Mr Bang Minjin, an analyst at HI Investment & Securities Co. in Seoul. Their one bright spot is about to fade.” Hyundai Heavy, based in Ulsan, South Korea, expects to cut the use of steel plate, its biggest raw-material cost, by 14 percent to 3.6 million tonnes this year. The company’s orders for oil tankers, container ships and dry-bulk vessels fell by 50 percent to 23 last year because of competition from China and a global drop in orders caused by over-capacity in shipping markets. The worldwide shipbuilding order book fell 26 percent in 2011, the biggest decline since Clarkson Plc began compiling data in 1995. At the same time, Hyundai Heavy won a record 11 orders for drilling ships last year as oil companies increase exploration. Such vessels, used for boring test wells, require about 20,000 tonnes of steel plate, half the amount needed for a 300,000 dwt oil tanker, according to the shipbuilder. New tankers have double hulls to help prevent leaks. A shipyard can sell a drilling ship for about US$600 million, about six times the price it will get for a 300,000 dwt oil tanker, according to Mr Lee Jae Won, an analyst at Tongyang Securities Inc. in Seoul.