Idan Ofer’s Eastern Pacific Shipping has returned to Hyundai yard grouping’s Korea Shipbuilding & Offshore Engineering (KSOE) for six LNG-fuelled containerships, just days after cancelling a similar order at rival South Korean yard Daewoo Shipbuilding & Marine Engineering.
TradeWinds understands that the Singapore-based shipping company is behind the order of the 15,000-teu newbuildings disclosed by KSOE this week.
The Hyundai Heavy Industries Holding companycontrols Hyundai Heavy Industries, Hyundai Samho Heavy Industries and Hyundai Mipo Dockyard.
One source said the newbuildings were optional berths held by Eastern Pacific at KSOE.
Officials at KSOE and Eastern Pacific declined to comment when contacted by TradeWinds.
Announcing the order on Monday in a regulatory filing, KSOE priced the ships at $823m in total but did not name the contracting party.
Ulsan-based HHI will build four vessels, while Hyundai Samho Industries is assigned to construct the other two ships.
Eastern Pacific is scheduled to start taking delivery of the vessels in the first half of 2023.
Strong demand
The neo-panamax containership newbuildings are understood to be charter-free. But Eastern Pacific is said to be in talks with a few liner players over the employment of the vessels.
There is a strong demand for 15,000-teu containerships, with liner companies such as Wan Hai Lines, Hapag-Lloyd, Evergreen Marine and Zim looking for tonnage.
The order surprised some industry players as it comes just days after an announcement that Eastern Pacific had terminated a six-ship, 12,000-teu newbuilding contract worth $700m at DSME.
Okpo-based DSME said the newbuilding order was cancelled “after the shipowner has failed to comply with contract terms”.
But a shipping player close to the business said both Eastern Pacific and DSME terminated the deal mutually, with both parties opting not to lift the subjects of the contract.
Eastern Pacific has booked the 15,000-teu vessels with KSOE as it has received a “decent offer” from the Hyundai shipbuilding group, the source said.
The [six-ship] newbuilding order was cancelled 'after the shipowner has failed to comply with contract terms'
DSME
Pricing
The shipowner is believed to be paying between $130m and $135m apiece for the six KSOE vessels — a price in line with its earlier 11 LNG-fuelled ships that it ordered more than a year ago.
This would price the newbuildings at between $780m and $810m, which is less than the $823m KSOE reported.
Eastern Pacific’s latest boxship newbuilding contract brings the total number of 15,000-teu neo-panamax boxships booked by the owner at the South Korean shipbuilding group to 22.
The earlier 16 vessels — 11 LNG-fuelled vessels and five scrubber-fitted conventionally-fuelled ships — were ordered between the end of 2017 and mid-2018. These 16 containerships are all fixed to French liner giant CMA CGM.
Hyundai Samho delivered the scrubber-fitted vessels plus two of the LNG-fuelled ships to Eastern Pacific in 2019 and 2020. The remaining nine dual-fuel newbuildings — four at Hyundai Samho and five at sister yard HHI — are due for delivery this year and in 2022.
China gave its nod of approval last month for the proposed merger between the two South Korean shipyard groups of Daewoo Shipbuilding & Marine Engineering and Korea Shipbuilding & Offshore Engineering Co (KSOE).
The State Administration for Market Regulation — China’s antitrust watchdog — said the planned $1.8bn merger, which comprises subsidiaries Hyundai Heavy Industries, Hyundai Mipo Dockyard and Hyundai Samho Heavy Industries, did not violate antitrust rules or hurt fair competition in the world’s second-largest economy.
An HHI official confirmed the approval notification from China and said the next step in the merger process would involve receiving approvals from Japan and the European Union.
A key sticking point is the EU’s concern over what effect the proposed merger will have on the LNG carrier market.
The European Commission has warned that the transaction could push up prices due to the companies having a combined market share of more than 50% of the global LNG carrier newbuilding market.
The commission has also expressed its concern that the deal would stifle innovation.
Previous concerns that it raised over the impact of the deal on the markets for large containerships, tankers and LPG carriers have been dropped.
The coronavirus outbreak has caused the EU to delay its review of the merger three times so far.
China is the third country to approve the merger of the two shipbuilding giants after antitrust agencies in Kazakhstan and Singapore gave the go-ahead for the takeover.
The process has been fraught with tension as only one country would need to block it for the deal to be off.
