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South Korean yards to face extended downturn into 2017

South Korean yards to face extended downturn into 2017
South Korea’s current shipbuilding industry slump, possibly the worse in the country’s history, is forecast to prolong into 2017 in view of continuing sluggish demand for newbuildings, according to Yonhap news citing a report by the Export-Import Bank of Korea (Korea Eximbank).

Yonhap cited figures from the report showing new orders at Korean yards plummeted sharply to 170,000 compensated gross tonnes (cgt) during the January-March period, down 94.1% year-on-year. In terms of value, the orders also nosedived by 94% year-on-year to $390m for the three-month period.

“Overall demand for new ships is weak and all kinds of shipbuilding orders seem to be abnormal,” the Korea Eximbank report said. “Their business slump may continue throughout this year, and demand for oil tankers may improve slightly during the second half of the year.”

The report said Korean shipbuilders are expected to win new orders worth 1.6m cgt this year, down 85% from the year-ago level. By value, the new orders are forecast to reach $3.5bn this year compared to $23.67bn in 2015.

With the cut in new orders, the order backlog is consequently expected to fall. As at end-April this year, Korean yards’ order backlog totalled 27.59m cgt, down 16.2% from year-ago figure.

“Given various conditions, the order backlog is estimated to keep them busy for less than two years,” the report said.