South Korea’s oldest shipyard Hanjin Heavy Industries & Construction (HHIC) is making a comeback in commercial shipbuilding after getting a new owner.

The shipyard is said to be in discussions with several shipping companies over containership newbuildings, including Germany's MPC Capital.

The Busan-based shipyard, which has not contracted any commercial newbuildings since 2014, is targeting the large boxship segment amid a market of rising newbuilding prices and a dearth of berths at yards, according to shipbuilding players.

MPC Capital is said to be in advanced stage talks with HHIC over six 5,300-teu ships worth at least $390m. The deal is for four firm vessels plus options for an additional two ships.

An executive at MPC Capital did not confirm the talks but said: "MPC Capital is always analysing growth opportunities and this may also include newbuildings."

An executive confirmed HHIC is "re-entering" the shipbuilding business for commercial vessels. He added that the yard has been approached by several companies for containerships but declined to name them.

He said a consortium led by civil engineering and construction company Dongbu Corp officially became the major shareholder of HHIC last week with more than 66% shares after acquiring stakes from state-owned Korea Development Bank. The value of the transaction was not disclosed.

“HHIC has a new owner and management team ... they have evaluated the shipbuilding market and decided that the shipyard should return to building commercial vessels.”

A medium-size yard, HHIC was known for building boxships and vessels up to aframax size. But stiff competition from China and low shipbuilding prices led HHIC to stop contracting commercial ships.

Naval business

“For the last few years, navy and military vessels have kept our shipyard with work,” said the HHIC executive. “Currently, we have over 1,000 yard workers.”

HHIC said it is targeting containerships of between 5,000 teu and 7,000 teu. The shipyard has a timeline of around 24 months to construct newbuildings once a contract has been signed. This means it could start delivering newbuildings from late 2023 if it manages to strike an order before the year ends.

The yard added that it is offering conventional-fuelled vessels but would be adding dual-fuel ships in the near future.

HHIC recently delivered one LR2 tanker — the 113,854-dwt Lion (built 2021) to banking giant JP Morgan affiliate Global Meridian Holdings. It is slated to deliver a second tanker, to be named Leopard, this month.

The two LR2 newbuildings were 70% built and were left at the dry docks of Hanjin Heavy Industries & Construction Philippines in Subic Bay when the shipyard closed down in 2018.

Compagnie Maritime Belge (CMB) enlisted HHIC to complete the newbuildings by paying $52.5m. The Belgium owner had the vessels towed from the Philippines to South Korea.

Global Meridian Holdings acquired the duo from CMB two months ago for $110m as part of the firm’s expansion activities in the product sector and to balance its MR tanker fleet.

Shipbuilding players said HHIC’s return to commercial shipbuilding is being done at the “right time” since most shipbuilding companies that are constructing boxships of between 5,000 teu and 7,000 teu have sold out their berths until mid-2024.

The newbuilding price is said to have been increased by 30% from $50m per ship in early this year.

“The shipbuilding price has gone up due to strong demand for newbuildings for all ship types and surging steel plate costs,” said a broker. “For the 5,000-teu boxship, we understand shipyards are quoting around $65m.”

According to Clarkson’s Shipping Intelligence Network, the orderbook of containership newbuildings of between 5,000 teu and 7,000 teu is only 55. All the newbuildings will be constructed by shipyards in China.

Shipping companies that have ordered the boxships include Seaspan Corp, Eastern Pacific Shipping, TS Lines, Asiatic Lloyd, Sea Consortium, Delphis and Navios Holdings.

Hanjin Heavy Industries & Construction's chief executive is Hong Moon-Ki. Photo: Hanjin Heavy Industries & Construction