Ten VLCC newbuildings ordered at Hyundai Heavy Industries and Hyundai Samho Heavy Industries in deals worth KRW 986bn ($878m) have been cancelled.
The world’s largest shipbuilder said the deal had been culled after the unnamed client failed to make a payment for the contract signed in November.
HHI was due to build seven of the 10 tankers in deals worth KRW 690bn, while its sister yard was due to construct the remaining three in a contract worth KRW 296bn.
News of the cancellations came in a regulatory filing on Thursday. The vessels, if they had gone ahead, were due to be delivered by March 2023.
TradeWinds reported in November that the newbuildings had been ordered by Seoul finance company Everest Korea Finance Advisory.
The company is said to be backed by Chinese investment company Everest Venture Capital, also known as Everest VC, which has offices in Shenzhen and Beijing.
Everest Korea is thought to have not yet secured any charters for the vessels. South Korean sources said Everest had hired HMM Ocean Service to supervise the newbuilding construction.
News of the order cancellation came as Korea Shipbuilding & Offshore Engineering (KSOE) — the Hyundai group’s shipbuilding holding company — reported a fourth-quarter operating loss of KRW 181bn, missing consensus estimates of a KRW 44bn operating profit.
In a conference call with analysts, management said they would continue to negotiate with shipowners for price increases and expect a gradual price recovery during 2021.
On the cancelled VLCC order, KSOE believes it can “strike better deals in 2021, as ship prices have continued to rise”.
The company said its 2021 new order visibility was “higher than 2020”, with management expecting to see 47% year-on-year growth on the back of a global macro recovery and key order pipelines in the LNG and containership segments.
HHI has set itself a newbuilding order target for this year of $8.8bn (up 67% year on year), while Hyundai Samho has a target of $4.3bn (up 16.7%).
