Expectations lowered, HD Hyundai Group announces 2024 order target

HD Hyundai Group, South Korea’s largest shipbuilding conglomerate, announced that Korea Shipbuilding & Offshore Engineering Co., Ltd.(HD KSOE), the intermediate holding company for its shipbuilding business, has set a 2024 merchant ship order target of $11.5 billion. The target represents a 45.8% decrease from the 2023 order book of $21.11 billion and a 13.6% decrease from the $13.3 billion merchant ship order target set for 2023.

In 2023, HD Hyundai Group’s merchant ship order book was exceeded by 59%, thanks to large orders for methanol dual-fuel-powered containerships in South Korea and France’s CMA CGM, and a continued boom in liquefied natural gas (LNG) carriers.

On January 3, HD KSOE said that HD Hyundai Heavy Industries’ merchant ship order target for 2024 was set at $5.2 billion, a 52.1% decrease from the 2023 merchant ship order of $10.054 billion. In addition to merchant ships, HD Hyundai Heavy Industries Ulsan Shipyard’s order targets for other business areas are also relatively low compared to 2023, including offshore equipment (KRW 1.015 billion, down 21.1 % Y/Y) and engine machinery (KRW 2.325 billion, down 25.5 % Y/Y).

Notably, in the field of specialty ship types, HD Hyundai Heavy Industries has received only $138 million in orders for 2023, while the company has set an order target of $988 million for 2024 in this field. It means that HD Hyundai Heavy Industries will build up its strength to charge in the field of specialty ship types this year.

Hyundai Samho Heavy Industries’ order target for 2024 was set at $3.2 billion, a 51.8% decrease from the full-year 2023 order book of $6.33 billion. Hyundai Mipo Shipbuilding’s order target is set at $3.1 billion, a 16.8% decrease from the full-year 2023 order book of $3.724 billion.

HD Hyundai Group said, “We have set a conservative order-taking target in consideration of higher-than-expected orders from affiliated shipyards in 2023.

For the other two large shipbuilders that have yet to announce their 2024 order targets, it is expected that Hanwha Ocean (formerly Daewoo Shipbuilding & Marine) and Samsung Heavy Industries are also likely to have lower 2024 order targets than 2023, when both companies did not meet their early-year expectations.

In 2023, Samsung Heavy Industries has taken orders for 29 new ships worth $8.3 billion, realizing 87% of its annual order-taking target of $9.5 billion. Hanwha Ocean, on the other hand, had an order-taking target of $6.98 billion in 2023, but got only $4 billion in orders for the whole year of 2023, and the company does not expect to disclose its order-taking target for 2024.

Currently, the three major Korean shipbuilders are all pursuing an order screening strategy that aims to focus on contracting high value-added ships and have already accumulated more than three years’ worth of work in the field of LNG carriers and other ship types.

Therefore, the South Korean shipbuilding industry’s 2024 order book is likely to focus on next-generation flagship vessels, such as Very Large Ammonia Carriers (VLACs). Samsung Heavy Industries won an order for two VLACs from Greek owner George Economou in late December 2023, aiming to respond to the growth of the liquefied petroleum gas (LPG) carrier market and the need to transport next-generation energy ammonia.

Yangzijiang Shipbuilding

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