South Korean shipyards used to dominate the orderbook for large tankers and container ships. That has all changed.
More than 80% of boxships and nearly 70% of VLCCs ordered this year have gone to China.
So, has South Korea ceded the shipbuilding arena to Chinese competitors?
Ralph Leszczynski, head of research at Banchero Costa, does not think so. He said limited shipbuilding capacity has led to South Korean yards securing fewer orders for the ship types.
“Since 2023, we have seen a significant increase in overall interest in tanker and dry bulk newbuildings, and with capacity in South Korea and Japan being limited, we are seeing that a large share of the overflow of demand is ending up in Chinese yards which [have] much more space capacity,” he said.
Leszczynski does not think South Korean yards are losing their competitiveness but are suffering from limited capacity — which they can do little to change.
He believes there is still a preference among shipowners for South Korean yards if slots can be obtained.
“This would change if the price gap between South Korea and China would increase more than the 10% … but I think that’s unlikely, as labour costs in China have been generally rising in recent years more than in Korea,” he added.
Leszczynski noted that South Korean shipyards continue to be perceived as the leaders in quality. In the secondhand market, shipping companies still view Chinese-built vessels as low quality, and this perception will take considerable time to change, even when its technically justified.
South Korea’s three major shipbuilders — HD Hyundai, Samsung Heavy Industries and Hanwha Ocean — have won fewer large boxship and tanker orders this year. However, their orderbooks remain packed, extending through the end of 2027, with some contracts stretching into 2028.
These yards have been focusing on high-profit projects such as LNG ships, LPG/ammonia carriers and offshore vessels.
The focus is also shifting to costly naval ships and wind farm projects.
HD Hyundai has leased part of Agila Subic Shipyard — formerly Hanjin Heavy Industries & Construction Philippines — to produce offshore wind platforms and ship blocks, and to maintain and repair naval vessels.
Hanwha Ocean has acquired Philly Shipyard in the US to enhance its global defence and shipbuilding activities.
