While the competition between Korea and China in shipbuilding industry is as fierce as ever, the received order quantity in both dockyards has sharply fallen. Oversupply of vessel tonnage had a strong impact on the fall of new orders, the specialists analyzed. Though China is aggressively promoting marine plant business, it hasn't lead to a tangible achievement. Shippers' Journal looked into the received order quantity in the shipyards of two countries.

Domestic shipbuilding market seemed to turn for the better with order quantity of 3.31 million CGT in the first half of this year. It accounted for 38% in the world's total order of 8.77 million CGT whereas their order amount decreased by about 63% from the same period previous year.

According to the report(trend of shipbuilding and marine industry for the first half) published by the Ministry of Knowledge and Economy(MKE), order amount Korean shipbuilding companies received during the first half decreased from last year's 38.2 billion dollars to 14 billion.

Global economic downturn was predicted to cast a cloud over shipbuilding industry for a long time. Even though slow recovery was shown in late 2009, critical situation is now facing world shipbuilding market again. Actually the world's total order in the first half recorded 8.77 million CGT, which is only 42% from the last year.

As shipbuilding business entered a state of depression throughout the world, Korea has also encountered some negative factors such as decrease in received order quantity and ship prices. Nevertheless Korean shipbuilders' order amount has gone up positively affected by contracts of environment-friendly, fuel-efficient and high value added ships like LNG vessel. Korean companies' order amount last year reached 51 billion dollars, up 49% compared to the previous year's 34.5 billion. Continuing fall in ship prices, however, has brought down Korea's order amount to 14 billion dollars in the first half of this year.

MKE evaluates that this year's order amount is almost equivalent to that of 2009 when ship orders were suspended. Orders other than merchant ships also fell by 25% from the last year.

Meantime, new ships' prices temporarily showed rebound trend after March 2010, but most type of vessels moved downward since June last year owing to decrease in order demand in accordance with the oversupply of vessel tonnage.

The new ships' price index showed 176.5 point in 2008 and then fell down to 137.7 point in 2009, but rebounded to 142.4 point in 2010. Again the index nudged down to 133.8 point in May this year. Nonetheless, LNG order amount has been maintaining a level of 20.2 billion dollars since 2010 based on continuous demand.

Some say such negative market conditions will still have an impact on the second half. According to the data from Korea Export-Import Bank, this year's received order quantity in domestic shipyards is very likely to remain 7 million CGT, down 48% from last year.

The industry is also unsure about the time when the shipbuilding business will be revitalized. Looking at the results for the 3 major shipbuilders in Korea, Samsung Heavy Industries recorded 6.5 billion dollars, 5.87 billion for Daewoo Shipbuilding and Marine Engineering and 4.93 billion for Hyundai Heavy Industries, which indicates that each order amount has decreased by 20~45% from last year.

Chinese shipbuilders fiercely competing with Korea have also gone through poor performances. Despite intensive promotion of marine plant industry by Chinese government, it is analyzed that their efforts didn't directly lead to improved results of the enterprises.

Korea Maritime Institute(KMI)'s China Research Center has recently reported that shipbuilding volume of China in 2011 hit a record high with 76.65 million tons, up 16.6% from the previous year, however, new order quantity reached just 36.22 million, down 51.9%. Surprisingly about 30% of Chinese shipbuilders failed to receive new orders.

As a way to get over the slump, China is foster marine plant as a strategic business but still hasn't paid off. Mr. Kim Bum Soo, a chief of KMI's China Research Center commented in this context "Policy announcement of the Chinese government didn't instantly lead to quantitative growth in their industry. Korean shipbuilders' domination in the world marine plant market still remains as a hurdle for China."