By MarEx 2015-07-29 16:17:15
The three largest ships yards in the world are in Korean and they are struggling for work and losing lots of money.
Daewoo Shipbuilding and Marine Engineering, Samsung Heavy Industries and Hyundai Heavy Industries (HHI) say it is due to plummeting oil prices and delayed offshore projects. The giant yards are reporting significant losses in 2015’s second quarter– Daewoo leads the way reporting a 3.03 billion KRW ($2.62 billion) operating loss. Samsung reports1.55 trillion KRW loss while Hyundai says it lost 171 billion won. The combined losses is the 4.75 trillion KRW or $4.1 billion.
Daewoo cites delays in the construction of gas oil rigs as well as lower freight rates in the cargo markets. Korean yards invested heavily in oil and gas rigs around 2010 in an effort to circumvent competition with the Chinese yards. Oil prices were sitting at about $100 per barrel at the time and the industry was booming.
The maritime sector on whole has been sluggish due to the global recession and economic slowdown. China has been the world’s workbench for the last decade or so. It shipyards have been some of the busiest in the world, but oil prices have plummeted by 60 percent and demand for drilling rigs and ships has slowed.
The 2nd quarter losses for the three Korean giants were Daewoo’s 2015 Q2 revenue fell 63.1 percent, Samsung’s revenues fell 44.8 percent, and Hyundai posted a 240 KRW loss down from last year’s loss during the same period of 489 KRW.
This post was sourced from Maritime Executive: View original article here.