Korean merger of Hyundai and Daewoo dominates shipbuilding sector
A combined entity of Hyundai Heavy and Daewoo Shipbuilding would create the largest shipyard in the world.
The merger of Hyundai Heavy Industries Co and Daewoo Shipbuilding & Marine Engineering Co being engineered in Seoul promises to create a behemoth controlling 20 per cent of the global market for new ships, and an even greater market share for liquefied natural gas carriers that are reconfiguring global energy markets.
The combination would also leave rival yards struggling to compete in China and Japan, raising questions about the commitment of those countries to support their own ship-builders.
Shipbuilding is a vital part of Asian countries ' economies like South Korea and China which employs hundreds of thousands of people.
During a long slump in maritime trade, Seoul and Beijing have repeatedly bailed out or subsidized money-losing shipyards as ship operators trimmed their fleets and new orders plummeted.
Stricter marine pollution rules coming into effect next year as well as increased demand for advanced ships such as LNG carriers have triggered a wave of new orders to replace aging fleets.
The merged Korean superyard may benefit the most. HHI and DSME have 52 per cent of existing orders for LNG carriers between them and control a fifth of the wider shipbuilding market.
Korean yards are also the favorites to win one of the biggest ship orders ever — a deal set to be signed by Qatar to ship gas from 2023 for some 60 LNG carriers. According to shipping services provider Clarkson PLC the order is estimated to be worth more than $10 billion.
Maritime Business World