Received 5 new ship orders in two consecutive days! Samsung Heavy Industries launches year-end sprint

Samsung Heavy Industries in South Korea is sprinting towards its annual target of receiving new ship orders totaling $600 million (approximately RMB 4.274 billion) from two shipowners in two consecutive days.

On November 1st, Samsung Heavy Industries announced that it has signed construction contracts for four Suezmax oil tankers with African shipowners, with a total contract amount of 459.3 billion Korean won (approximately 340 million US dollars), equivalent to a single ship price of 85 million US dollars, and plans to deliver them to the shipowners before December 2027.

Samsung Heavy Industries did not disclose specific information about the relevant ship owners, but according to foreign media reports, this order comes from Dynacom, a subsidiary of Greek ship owner George Procopiou's oil tanker company. The ship broker pointed out that the unit price of $85 million per ship is at a low level for South Korean shipping companies, which may be due to the fact that this batch of new ships will be subcontracted to a Chinese shipyard for construction. This is the first time that Samsung Heavy Industries has subcontracted ship construction to a Chinese shipyard.

As a reference, Clarkson's data shows that the new shipbuilding price of a 156000-158000 deadweight ton Suezmax oil tanker has reached $90 million, an increase of 6% compared to $85 million in the same period last year.

On October 31st, Samsung Heavy Industries just announced that it has taken on an order for one LNG carrier from an Asian shipowner, with a price of 358.2 billion Korean won (approximately 260 million US dollars), and plans to deliver it to the shipowner before June 2027. According to foreign media reports, this order comes from Kawasaki Steamship in Japan, and the new ship will be leased on a long-term basis by Gas India (GAIL).

As a reference, Clarkson's data shows that the price of a 174000 cubic meter LNG ship newly built has fallen from the peak level of $265 million last year to $261 million.

Including the latest two orders, Samsung Heavy Industries has received 29 orders for ship and sea equipment so far this year, with a total contract amount of approximately 6 billion US dollars (about 42.6 billion yuan), completing 62% of its annual order target of 9.7 billion US dollars, including 22 LNG ships, 2 very large liquid ammonia carriers (VLACs), 4 oil tankers, and 1 shuttle oil tanker.

In February of this year, Samsung Heavy Industries announced its target order amount for this year, planning to undertake ship and offshore engineering orders worth $9.7 billion for the whole year, an increase of 16.9% from last year's actual order amount of $8.3 billion and an increase of 2.1% from the confirmed order amount of $9.5 billion at the beginning of last year. Samsung Heavy Industries is also the only South Korean company among the three major shipping companies to increase its order taking target for this year, but it has the lowest completion rate so far.

Industry insiders in South Korea have stated that compared to the other two large shipping companies in South Korea, Samsung Heavy Industries has significantly slowed down its order taking pace this year. In contrast, HD Korea Shipbuilding Ocean has received 169 orders for ship and sea equipment this year, with a total contract amount of 18.84 billion US dollars (approximately 134.2 billion yuan), completing approximately 139.6% of its annual target of 13.5 billion US dollars. Since the beginning of this year, Hanhua Ocean has received orders for 37 ships and marine equipment, with a total contract amount of approximately 7.35 billion US dollars (about 52.4 billion yuan), which is double the 3.52 billion US dollars for the whole year of 2023.

In addition, industry analysis suggests that out of the 29 new ship orders taken on by Samsung Heavy Industries this year, 22 are LNG ships alone, accounting for 76% of the total number of ships, indicating a concentration of ship types. Although LNG ships are high value-added vessels with high profits, if there are changes in the LNG ship market, the company may face the risk of order shortages.

In response, Samsung Heavy Industries stated that the company currently holds orders worth 31.9 billion US dollars (approximately 223.89 billion yuan), which has ensured a stable workload for more than 3 years. Therefore, it will continue to implement a selective order taking strategy centered on high value-added ships.

Samsung Heavy Industries stated that in the global oil tanker market, compared to its fleet, it holds fewer orders and has a higher proportion of old ships. In addition, the International Maritime Organization (IMO) has strengthened environmental restrictions and the EU's carbon emission restrictions have come into effect, and it is expected that the oil tanker market will continue to have a strong momentum of order making. At present, the company is in negotiations with shipowners regarding orders for multiple projects such as environmentally friendly container ships, LNG transport ships, FLNG, etc. We plan to continue to add orders centered on competitive high value-added environmentally friendly ship types, strive to achieve this year's order targets, and seize the future market for new products through continuous development of environmental protection technologies.

A spokesperson from Samsung Heavy Industries stated, "It is expected that global energy demand will continue to increase. While maintaining a selective ordering strategy centered on high value-added ships such as LNG and FLNG, the company will also carefully study the market conditions of container ships and oil tankers and respond flexibly

Samsung Heavy Industries also stated that the Clarkson Newbuilding Price Index has reached 190 points, unchanged from its peak in 2008 and up 52% from its low point at the end of 2020. Considering the increasing demand for LNG in the medium to long term and the ongoing LNG projects, it is expected that there will continue to be around 70 new LNG ship orders per year in the future.