Daewoo Shipbuilding Raises 2006 Order Target by 20% to a Record
By Kyunghee Park and Seonjin Cha
Oct. 1 (Bloomberg) -- Daewoo Shipbuilding & Marine Engineering Co., the world's second-largest shipyard, raised its target for new orders this year to a record $12 billion on increased demand to produce and transport energy goods.
The shipyard expects new orders this year will be 20 percent higher than its earlier forecast of $10 billion, the Seoul-based company said in an e-mailed statement today. It has clinched contracts valued at $10.2 billion so far in 2006. Last year, it won a total $6.8 billion worth of orders.
Daewoo Shipbuilding joins South Korean rivals Samsung Heavy Industries Co. and STX Shipbuilding Co. in increasing forecast for new orders this year, boosted by global demand for energy products. Shipyards in South Korea, home to the world's biggest, and other dockyards in Asia have been receiving contracts to build rigs and vessels to carry oil, liquefied natural gas and other products.
``Growth in trade and increased energy demand have helped South Korean yards secure a lot of orders, exceeding earlier expectations,'' said Song In Ho, who manages the equivalent of $423 million at Kyobo Investment Management Co. in Seoul. ``This momentum will most likely continue until next year.''
Daewoo Shipbuilding raised its order forecast this year after winning contracts for three vessels valued at $430 million. One of the contracts is for a ship that can carry LNG to Taiwan's TMT Co. by August 2010 and the other is for two vessels that can transport liquefied petroleum gas to Greece-based Brave Maritime Corp. by January 2010.
Samsung Heavy, the world's third-largest shipyard, raised in August its target to win new orders this year 56 percent to $12 billion. STX Shipbuilding, South Korea's seventh-largest, increased earlier this month its goal to secure $3.6 billion in contracts this year, from $2.6 billion.
`Expensive Vessels'
``We have also been able to secure more expensive vessels, making up for 88 percent of the total contracts,'' Daewoo Shipbuilding said in the statement.
With the latest $430-million order, Daewoo Shipbuilding has secured contracts for 14 LNG vessels with a backlog of 38, the biggest in the world, the company said. It also won contracts for 11 so-called very large crude carriers, or VLCCs, this year.
Orders for drillships, platforms and other offshore projects have reached a record $4.23 billion this year, almost tripling last year's $1.47 billion, the company said.
Daewoo Shipbuilding has an order backlog valued at about $23 billion, which will help keep its dockyards busy for more than three years.
South Korean shipyards have received orders for 9.6 million compensated gross tons, a measure of building time and human resources used per ton in the first half, 33 percent more than a year earlier.
Demand for Tankers
Shipowners have spent about $207 billion in the past three years on new vessels, including container carriers and tankers, the same amount as in the preceding decade, according to Clarkson Plc, the world's biggest shipbroker.
Demand for tankers also increased this year as the expanded global economy has spurred demand for oil and other raw materials. Global trade volumes will grow 7.6 percent this year, according to the International Monetary Fund.
Stricter safety rules that took affect in April have also driven demand for tankers. Ships built under the common structural rules require as much as 9 percent more steel to reinforce the hull, according to the American Bureau of Shipping. The guidelines affect VLCCs which are longer than 150 meters (492 feet).
The rules, set up to enhance safety of vessels, involve using thicker steel plates and increasing the number or size of frames used in the construction of ships.
This year, South Korean shipyards may win orders for 11.78 million compensated gross tons, a measure of building time and human resources used per ton, 15 percent more than in 2005, according to the Ministry of Commerce, Industry and Energy.
Exports of vessels are forecast to increase 26 percent to a record $22.3 billion, according to the ministry.
Daewoo Shipbuilding shares rose 0.3 percent to 30,600 won on Sept. 29, the highest closing price in almost two months. The stock has gained 11 percent this year, compared with a 0.6 percent decline in the benchmark Kospi index.
To contact the reporter on this story: Kyunghee Park in Singapore at kpark3@bloomberg.net ; Seonjin Cha in Seoul at scha2@bloomberg.net ; Last Updated: September 30, 2006 20:01 EDT