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SCMP Reporter

SOUTH Korean shipbuilding orders will hit a record this year but the industry's turnover is expected to fall because of sluggish orders last year.

  Leading builder Hyundai Heavy Industries is expected to earn 1.66 trillion won (about HK$16 billion) in ship sales, down 8.9 per cent from last year.

  This compares with a 57.2 per cent boost the company enjoyed last year, when sales reached 1.82 trillion won, according to the Korea Shipbuilders' Association.

  Daewoo Shipbuilding and Heavy Machinery is expected to have shipbuilding turnover of 700 billion won, down 500 million won from last year.

  The phenomenon basically results from slumping orders last year of 1.65 million tonnes, only one-third of the 1991 figure.

  Korean yards built 66 ships, aggregating 2.78 million gross tonnes in the first 10 months of this year, down 26 per cent from the same period last year.

  With the falling turnover, profitability is also expected to deteriorate, since the yards are willing to sign contracts at prices between 10 and 15 per cent lower than last year.

  Industry watchers said the Korean builders would not make much money next year, despite the fattest-ever order books this year.

  South Korea's shipbuilding order book surged during the third quarter as shipyards benefited from price advantages over Japanese competitors.

   While the size of Japan's shipbuilding order book only increased by 48,115 gross tons in the the three months ended September 30, South Korea logged an additional 2.9 million tons of new orders, according to latest figures from Lloyd's Register of Shipping.

   With a total order book of 10.1 million gross tons, South Korea has almost caught up with Japan whose order book stood at just over 11 million tons at the end of the third quarter.

  Korean makers of shipbuilding equipment and materials are also enjoying good business as more Japanese yards are turning to Korean in an effort to stem their worsening price competitiveness because of the rising yen.

  Inchon Iron and Steel Co recently one a US$1 million order from Ishikawajima-Harima Heavy Industries, one of the seven major Japanese shipbuilders, to supply 30 tons of cast and forged steel sterns.

  These will be fitted onto four ultra-large crude carriers the Japanese firm is building.

  Last month, Ssangyong Heavy Industries signed a US$7 million contract for ship engines with a medium-sized Japanese builder.

  Ssangyonghas also exported 50 engines worth US$20 million to a Japanese ship engine distributor.

  Ssangyong officials said inquiries from Japanese buyers were increasing.

  They said the company was trying to diversify its sales to engine parts and steel casts to meet growing demand.

  Samsung Heavy Industries has obtained a US$10 million order for hatch covers and Oriental Precision a US$4 million contract for panels.

  Industry sources said the major Japanese yards, including, Mitsubishi Heavy Industries, NKK Corp, Mitsui Engineering and Shipbuilding, and Sumitomo Heavy Industries, were now eager to import quality foreign shipbuilding equipment and materials.

  Most of the big Japanese yards have already set up sourcing offices in Korea.



Korean orders set to reach all-time high