Hanwha Ocean Denies Reports it is Reducing Ops and Ending Boxship Orders
South Korea’s third largest shipbuilder, Hanwha Ocean, was quick to deny reports in the media that the company plans to reduce shipbuilding activities to focus only on higher-value orders. This comes despite reports that the former Daewoo Shipbuilding & Marine Engineering continues to struggle to rebuild profitability and expand its orderbook after the acquisition by Hanwha Group was completed earlier in 2023.
The company stated emphatically that it has no plans to reduce operations for the shipbuilder. In the fall of 2023, they unveiled new designs including for very large ammonia gas carriers, hydrogen carriers, and other new vessel segments. Hanwha Group also made it clear that they planned to leverage the company’s position as a naval builder and expertise in submarines and warships to grow the business and realize opportunities between its divisions.
Korean media reports suggested this morning that Hanwha Ocean has decided to forgo future orders for lower-value ships, specifically containerships. The report asserted that the company had already forgone orders in 2023 for containerships as it was losing more than $7.5 million on each containership delivered.
The report further suggests that as the company works down some of the order backlog it was also planning to close one of its current five dry docks used for assembly. Earlier in 2023, the company highlighted the rehabilitation of the dry docks including the ability to build four large LNG carriers simultaneously in its main dry docks.
Historically, DSME was a leader in the containership segment with the media reports highlighting as late as 2021, DSME won orders for 10 new large containerships. DSME, now Hanwha Ocean, for example, is building the large LNG dual-fuel containerships for Hapag Lloyd. However, the reports pointed out that in 2023 the yard took in no new containership orders.
Hanwha Ocean management last week confirmed to the Korean media that it was continuing to refine the shipbuilding strategy and would not be publicly releasing order targets for 2024. The media reports said the yard had reached just over half of its $7 billion order target in 2023. The yard won orders for five LNG carriers, five ammonia carriers, and seven naval ships, and is believed to be in continuing price negotiations with QatarEnergy to finalize a larger order for LNG carriers which has been expected in recent months. HD Hyundai was the only one of the big three Korean shipbuilders to convert the reservations into firm orders from Qatar in the second half of 2023.
DSME was reporting large financial losses with government officials saying that it required investments and a new management focus. The government-run Korean Development Bank auctioned off the shipyard in 2022 saying that Hanwha would provide the capital and strength to ensure its future. After many months of financial losses, Hanwha reported the shipyard had returned to profitability in the third quarter of 2023.
The media reports emphasized the strong competition from the Chinese shipyards which are now winning most of the orders for containerships. They said that the competition was pressuring the price for new containership orders. The Korean government has emphasized that the future competitiveness of the shipbuilding industry lies with high-value ships, primarily LNG carriers, where Korea continues to have a strong lead as well as new technologies including ammonia, hydrogen, and automation of navigation and ship operations.