South Korea’s Daewoo Shipbuilding & Marine Engineering said it has cancelled a $770m order for containerships after the shipowner “has failed to comply with contract terms”.

The Koje-based shipyard said an unnamed company signed up the newbuildings a year ago “but it did not carry out conditions necessary for the deal to take effect”.

In a regulatory filing, DSME said the order cancellation will not cause any financial loss to the shipyard, since it has yet to launch the construction of the ships.

Officials at DSME declined to disclose the identity of the company behind the order or the size of the vessels involved.

But shipbuilding sources said they believe order that the shipyard has terminated was placed by Singapore’s Eastern Pacific Shipping.

Last December, the Idan Ofer-led shipping company was reported to have signed up for six dual-fuelled, 12,000-teu newbuildings at DSME for delivery in the second and third quarters of 2022. The high-reefer boxships, which were to run on either LNG or conventional fuels, were reported to be cost about $128.5m apiece.

Eastern Pacific was not available for comment.

Shipbuilding sources said Eastern Pacific had attached conditions to the newbuilding contracts that included securing employment for the vessels.

“Another reason that Eastern Pacific did not go ahead with the boxships order is that shipbuilding prices have fallen this year due to low newbuilding demand and pandemic,” an industry source said.

As an example, he cited a recent order for 15,500-teu conventional-fuelled containership newbuildings booked by Zodiac Maritime at DSME. Those ships cost just $109m each.

“It will cost an additional $15m per ship if they are to run on LNG fuel,” he said.