Korean Shipbuilding Productivity

August news of a tenth drydock at Hyundai Heavy’s Ulsan shipyard (640m X 92m, January 2009 completion) underlines the acceleration of capacity of South Korean shipbuilders. It is clear that we are in supply super cycle with a doubling of capacity through to 2010. Demand has been vigorous for most of 2007 in the bulk arena while a surge of mega containership contracting has added an unexpected dimension to the newbuilding juggernaut.

Unlike the multi-pronged demand of last year, with owners chasing bulkers, tankers, containers and LNG, this summer’s hunger in the newbuilding market was clearly for big containerships.

Supply elasticity has now become the order of the day at shipyards, and Worldyards has fairly consistently been presenting forward capacity numbers well above market consensus. Our policy is to remain neutral in our public discussions about the impact of supply on newbuilding prices, as we do not wish to be seen as promoting a bias.

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