HD Hyundai’s container ship delivered to A.P. Moller – Maersk in January 2024 (Courtesy of HD Hyundai)
South Korea’s largest shipbuilder HD Korea Shipbuilding & Offshore Engineering Co. (HD KSOE) is eyeing around $3.4 billion worth of orders from CMA CGM, the global No. 3 shipping company, amid the expectation of rise in container ship prices.
Shipping industry sources said on Sunday that HD KSOE, the interim shipbuilding holding company under HD Hyundai, has signed a letter of intent with CMA CGM for building 18 container ships, including six vessels with 80,000 twenty-foot equivalent unit (TEU) each and 12 vessels with 15,000 TEU each, and will close the final deal in around a month.
If the final deal is clinched, HD KSOE will achieve $15.5 billion in orders this year, exceeding the target of $13.5 billion. The company will build the six and 12 dual-fuel container ships in sequence for delivery in 2027 and 2028.
(Graphics by Dongbeom Yun)
The newbuilding price of an LNG dual-fuel vessel with 15,000 TEU is more than $200 million per unit, nearly doubling the price a year earlier, according to Clarksons Research.
“The price of container ships continues to increase, compared with the price growth slowdown in LNG carriers and large oil tankers,” a shipbuilding industry official said.
Global shipping giants including Denmark’s A.P. Moller – Maersk A/S, Germany’s Hapag-Lloyd AG and China’s Cosco Shipping Corp. are also poised to award shipbuilding orders amid expectation that the maritime transport market is on a long-term upward curve, according to industry sources.
RISE IN CONTAINER SHIP PRICES
The Shanghai Containerized Freight Index (SCFI), a key indicator for container shipping rates, has continued to increase since March 29 due to prolonged disruption to global trade in Red Sea.
The index increased for 11 straight weeks to 3476.60 last week, driving a surge in newbuilding price of container vessels.
(Graphics by Dongbeom Yun)
Korean shipbuilders haven’t built container vessels, once a cash cow, in recent years as China has become a dominant player in the market. Chinese shipbuilders make up more than 50% of global container ship markets and 96% of global containers, according to the Center for Strategic and International Studies (CSIS).
Korea’s shipbuilding major Hanwha Ocean Co. has temporarily suspended receiving container ship orders since last year, while HD KSOE has focused on sales of gas carriers such as ammonia carriers as its dockyards have been full with three-year deliveries, without enough space for large-sized container ships.
As the US-China trade feud expands into maritime logistics, Korean shipbuilders are expected to attract more orders from global ship owners that keep Chinese companies in check, industry sources said.
By Hyung-Kyu Kim
khk@hankyung.com
Jihyun Kim edited this article.
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