Improving orders raise share prices of Korean yards

Share prices of South Korean shipbuilders are rising following large orders won in recent months and there are hopes the high level of newbuilding orders will continue. Shares in Korea Shipbuilding & Offshore Engineering, the new company which manages shipbuilding divisions of Hyundai Heavy Industries Group, have risen around 26% in the last month. Shares in Samsung Heavy Industries rose 19.7% in the past month, while shares in Daewoo Shipbuilding & Marine Engineering rose 23% on the month. "The recent surge in shipbuilding shares is mainly due to the rising number of order intakes and speculation that the industry will further recover through the fourth quarter," said an analyst at Shinhan Financial Investment. Analysts said South Korean shipbuilders could be able to continue the high level of shipbuilding orders as demand for environmentally friendly ships, such as liquefied natural gas-powered ships, are rising ahead of new International Maritime Organisation (IMO) pollution-control regulations. The IMO will implement a mandatory reduction of sulphur oxide emissions from January 2020. "It indicates that South Korean shipbuilders, who boast advanced technologies in eco-friendly ships, can expand their presence in the market," an analyst at Samsung Securities, said. "With the recovery of charter rates, vessel owners can purchase more ships. It is also expected that the offshore floating facilities market will recover."