Korea's "Big Three" Get Stock Price Bump as US Scrutinizes Chinese Yards

Hanwha Ocean LNG carriers — Hanwha Ocean file image

The Biden administration's decision to investigate Chinese shipyards has had a positive side effect for their South Korean competitors. Korea's "Big Three" yards have all seen their stock prices jump since March 12, when the White House's trade office confirmed that it would follow up on American labor unions' complaints about Chinese competition.

Korean investors expect that the probe into Chinese yards could lead to more business for South Korean shipyards, explained Business Korea: LNG carriers are a Korean specialty, and any American preference for non-Chinese tonnage could favor continued Korean dominance in the sector.

Over the two weeks since the announcement, the share price for Hanwha Ocean (formerly DSME) has risen more than 20 percent. Samsung Heavy Industries (SHI) has jumped by nearly 11 percent, and KSOE (an HD Hyundai entity) is up by more than eight percent. The majority of the gains occurred on March 14, after the news of the inquiry broke.

The White House's Office of the U.S. Trade Representative (USTR) is looking into an extensive list of complaints filed by the U.S. steelworkers' union (UWS), along with machinists (IAM), shipbuilders (IBB), electrical workers (IBEW), and the AFL-CIO’s Maritime Trades Department. In the initial announcement, Ambassador Katherine Tai accused China of creating dependencies in industrial sectors, harming American workers, and "creating real risks for our supply chains."

“USTR and the Biden-Harris Administration are fighting every day to put working families first, rebuild American manufacturing, and strengthen our supply chains," she said.

HD Hyundai and Hanwha Ocean also may stand to benefit from American defense contracts. Both are familiar with U.S. Navy technology, and Hanwha in particular has expressed an interest in investing in defense shipbuilding abroad.

Last month, U.S. Secretary of the Navy Carlos Del Toro toured both yards, and he called on their executives to come to America.

"As world class leaders in the global shipbuilding business, [Hanwha and HD Hyundai] are poised to energize the U.S. shipbuilding marketplace with fresh competition, renowned innovation and unrivaled industrial capacity," Del Toro said. "I could not be more excited at the prospect of these companies bringing their expertise, their technology, and their cutting-edge best practices to American shores."