HD Hyundai has once again struck a major order jackpot exceeding 1 trillion won. With newbuilding ship prices on an upward trend over the past two months, the deal is expected to have a positive impact on future profitability.
HD Korea Shipbuilding & Offshore Engineering (009540), the intermediate shipbuilding holding company of HD Hyundai, announced Monday that it signed a contract late last month with an Asia-based shipowner to build eight very large gas carriers (VLGCs), according to industry sources. The total contract value reaches 1.4161 trillion won. The VLGCs will be built by HD Hyundai Heavy Industries (329180) and delivered by the first half of 2030.
While HD Korea Shipbuilding did not disclose the client in its regulatory filing, industry observers believe the order came from BW LPG, one of the world's largest liquefied petroleum gas (LPG) shipping companies. BW LPG operates a fleet of approximately 50 VLGCs and appears to have begun a large-scale fleet replacement.
Including this latest deal, HD Korea Shipbuilding has secured contracts for a total of 123 vessels worth $14.17 billion to date. The company has achieved 60.8% of its annual order target of $23.31 billion in just five months. Considering delivery timelines, the order backlog represents four years' worth of work.
By vessel type, the orders include 16 liquefied natural gas (LNG) carriers, 28 container ships, 36 LPG, ammonia and liquefied carbon dioxide carriers, 7 crude oil tankers, 33 petrochemical product carriers (PC), 2 pure car and truck carriers (PCTC), and 1 other vessel (icebreaker).
Despite China's low-price order offensive, Korean shipbuilders are performing strongly by clinching consecutive large contracts in LPG carriers, following their dominance in LNG carriers, both representative high value-added vessel types. According to securities industry sources, Clarksons Research's newbuilding price index stood at 185.02 as of the 29th of last month, up 0.08 points from the previous week. The newbuilding price index has been rising in decimal increments for nine consecutive weeks.
