South Korea shipbuilders report growing order books

Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering of South Korea have won orders for doubled-hulled tankers worth $1.5bn this week.

The orders, received from state-owned Oman Shipping Company for delivery in 2012, are reported to have been agreed at prices higher than those achieved in 2007. This follows another $1.35bn order reported by Hyundai Heavy for large-sized container vessels from Europe. South Korean shipyards have received over $6.5bn in new orders in 2008, more than 50% higher than last year. The news is being taken as evidence that the effects of the US economic slowdown on the global marine transport industry may have been overstated.

“There’s been speculation that the industry faces challenging times, with slower demand for new shipping capacity and a more difficult financing environment, “ says Chris Palmer, Head of Global Emerging Markets at Gartmore. “ In fact, we remain positive as demand appears to be holding up, particularly for vessels used in the energy industry, for exploration and the transportation of products like liquified natural gas (LNG). The needs of ship owners have changed. Scale is important, so we are moving towards larger-sized container vessels, with greater focus on fuel efficiency and engine technology.”

Both the Gartmore Emerging Markets Opportunities Fund and the Gartmore SICAV Emerging Markets Fund have overweight positions (relative to their benchmark) in Hyundai Heavy Industries and Hanjin Heavy Industries. The Gartmore Emerging Markets Opportunities Fund ranked in the top quartile relative to peers over the last year.