In recent years, Chinese shipbuilders have significantly increased their investments to handle a surge in orders, while South Korean shipbuilders, cautious from past experiences of overexpansion and subsequent downturns, are taking a more selective and strategic approach, reports The Chosun Daily.
Chinese Shipbuilders’ Expansion
According to the shipbuilding industry on July 23, China’s largest private shipbuilder, Yangzijiang Shipbuilding, announced plans to construct a new shipyard spanning approximately 860,000 square meters along the Yangtze River. This facility, set to be completed within two years, will require an investment of 3 billion yuan (approximately 573 billion won or $411 million).
New Times Shipbuilding is set to build a large dry dock capable of constructing two Very Large Crude Carriers (VLCCs) and two smaller crude carriers simultaneously. This dock will support the construction of 32 LNG dual-fuel containerships, a recent order. The construction costs for the dock have not been disclosed.
Hengli Heavy Industry, rebranded after Hengli Group acquired STX Dalian Shipyard, is investing $1.3 billion (approximately 1.8089 trillion won) in its Changxing Island facility. This project aims to establish an annual steel processing capacity of 1.8 million tons and a shipbuilding capacity of 7.1 million deadweight tons.
Asian shipyards have been ramping up production capacities to meet the recent surge in orders. The number of operational shipyards in Asia increased from 153 in June 2022 to 180 in June this year.
South Korean Shipbuilders’ Strategic Investments
In contrast, South Korean shipbuilders, having restructured significantly after past overexpansions, are now focusing on qualitative growth. Rather than merely increasing production capacity, they are updating outdated facilities, developing eco-friendly technologies, and establishing smart shipyards.
HD Hyundai Heavy Industries (HD HHI), along with HD Hyundai Samho and HD Hyundai Mipo, will invest about $1.24 billion (1.7172 trillion won) in facilities by 2026. HD HHI plans to invest 215.7 billion won to reduce volatile organic compounds (VOCs) and upgrade ventilation systems in its coating factory by December next year. Additionally, it will spend 188.4 billion won to replace outdated cranes by the end of this year. HD Hyundai Samho will allocate 690.9 billion won for machinery upgrades this year, while HD Hyundai Mipo aims to invest 622.2 billion won in production facilities by 2026.
Hanwha Ocean, having raised about $1.44 billion (2 trillion won) last year, will allocate 900 billion won for special ships, including warships. It plans to invest 250 billion won in surface and submarine construction facilities at its Geoje shipyard and 500 billion won in equity investments in overseas production bases and maintenance, repair, and overhaul (MRO) bases. Recently, Hanwha Ocean acquired Philly Shipyard in Philadelphia for $100 million (about 130 billion won) and is pursuing the acquisition of Australian defense company Austal.
In the merchant ship sector, Hanwha Ocean plans to invest 600 billion won in developing eco-friendly propulsion systems based on ammonia, methanol, and hydrogen, along with other eco-friendly fuel-powered carriers. It has also formalized the establishment of ‘Hanwha Shipping LLC’ to focus on eco-friendly ship development. Additionally, the company will invest 200 billion won in the offshore wind sector and 300 billion won in building smart shipyards.
Samsung Heavy Industries (SHI) is prioritizing research and development (R&D). Its R&D centers in Geoje, Pangyo, and Daedeok are conducting research on eco-friendly energy solutions, including liquefied hydrogen-powered ships and fuel supply systems. In the first quarter of this year, SHI invested about $13 million (17.731 billion won) in R&D, a 19.7% increase from the previous year, surpassing the R&D investments of HD HHI (about 17.6 billion won) and Hanwha Ocean (about 14 billion won).
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Source: The Chosun Daily
