Hwang & Co > ::: HWANG & COMPANY ::: Shipbrokers in Korea > Korea Report

Home > Report > Korea Report

Korea Report - August 2006

Author : Hwang & Co Date : 06-09-15 06:48 Hit : 40375

Topics.

-Japanese PM visit Yasukuni Shrine on Japan’s WWII surrender day.
-The “Sea Story”, a video game, vaulted to centre stage.
-Concerns are raised over the discord between SKorea-USA.
-Country is shaken by the debate over the plan to regain wartime operational control from USA.
-Shinhan Financial Group was chosen as a preferred bidder for LG Card.
-Samsung marched into US mobile telecommunication market with its own “WiBro” system.
-Level of overseas construction topped $10.5 bil.
-KWon kept stable in the box of 961-965.
-Korean yards posted positive result in second quarter.
-POSCO is floated as the most eligible name to aquire DSME.
-SHI raised its sales target.
-John Fredriksen faces a demand to return part of its eanring from investment in HMM.
-Hanjin Shipping opened the era of 10,000 teu boxship operation.
-Korean Shippers experienced big downturn in second quarter earning.

GOVERNMENT AND SOCIETY

In an effort to ease the tension that flared up between the President and his party in the latest cabinet reshuffles, President Roh Moo-hyun conceded to nominate Kim Sung-ho, 55, secretary general of the Korea Independent Commission Against Corruption, as the new justice minister. He is a career prosecutor who has served for over 20 years at the state prosecutors' office. President Roh once indicated former presidential aide Moon Jae-in, the 52-year-old attorney, to justice minister. Uri Party rejected the proposal and accused Moon of his remarks about the failure of May local election, to perpetuate the country's regional divide. Party leaders also pressured the education minister to step down within 3 weeks of his appointment, while the president urged the party respect his authority. The president appears anxious to place key associates in his cabinet to preserve his authority during his remaining term in office. Roh's presidency will expire after the Dec presidential ballot, but faced conflict with his party almost at every nomination, since his popularity was lowered.
President Roh Moo-hyun named Chon Hyo-suk the new chief justice of the Constitutional Court. Chon, 55, became the first woman and the youngest-ever judge to head the 9 member Constitutional Court of Korea. Due to Chon's notably liberal judgment record and, more significantly, her close ties with the president, the nomination seems to spark fierce debate from the main opposition Grand National Party at the confirmation hearing.

In US Senate, 31 Republicans and Democrats jointly signed a letter asking President Roh for the removal of the US beef ban, warning that a failure to do so could result in Washington abandoning its pursuit for an FTA with Seoul. Korean government stressed that the matter is quite separate from the Korea-USA FTA talks. Seoul has not yet decided when to remove the ban as it waits for Washington to provide concrete evidence of extra safety measures in meat-processing facilities. Tokyo resumed US beef imports on July 27, easing its own heightened trade tensions with USA.
The 2 days meeting between Korea and USA on pharmaceuticals and medical equipment ended positively in Singapore, allowing 2 countries to jump-start stalled FTA talks. The second round of formal FTA talks, held from July 10-14 in Seoul, ended earlier than scheduled because of disagreements over Korea's new drug-pricing policy. The third round of FTA talks is scheduled during Sept 6-9 in Seattle.

The outrage swept Korea as Japanese PM Junichiro Koizumi went ahead with his planned visit to the Yasukuni Shrine on on Aug 15 - Liberation Day in Korea and Japan's World War II surrender. President Roh condemned Koizumi's visit, saying "Japan must sincerely reflect on its past conduct and translate into actions its intention never to repeat the wrongdoings.” President Roh also urged Japan to take steps to resolve pending bilateral issues, such as the prime minister's visits to the Yasukuni Shrine, the history textbooks, and claims to the Dokdo islets. Korea's Foreign Ministry summoned Japanese Ambassador to protest the visit. China's Foreign Ministry also summoned Japanese ambassador in Beijing to state "The Chinese government strongly protests this behavior, which severely hurts the feelings of the people in countries that were victims of the Japanese war of aggression, damaging the foundation of mutual relations." Both Korea and China strongly opposed the visit, which is interpreted as a demonstration of Japan's nostalgia for its past militarism. The shrine deifies 2.4 million war dead, including 14 Class-A war criminals.

The popular video slot game vaulted to center stage this month after authorities arrested the manufacturer and distributors. The adult game rooms were equipped with government-approved electronic slot machines like "Sea Story," "Mermaid Story" and "Golden Castle", leaving a growing number of Koreans penniless and addict to gambling. The game's developer, A-One Biz, has reportedly sold over 59,000 slots at KW7 mil to local arcade operators. In the beginning of 2004, the domestic market for adult video arcade games amounted to KW2 tril. But, in late 2004, "The Sea Story" entered the market with approval from the authority, the amount had doubled to KW4 tril on the huge wave of "Sea Story," which awards over KW2.5 mil worth of gift certificates as prizes, more than its legal maximum jackpot of KW20,000. The government assumed the illegal gambling market amounts to about KW8.8 tril a year.
The Prosecutor-General called for an all-out effort to resolve the suspicions surrounding a popular game machine. A growing number of politicians are under suspicion of collaborating with the gift certificate issuers. The prosecutors confiscated documents from the offices of state-run Korea Media Rating Board and the Korea Game Development and Promotion Institute. They also raided the offices of 19 companies issuing gift certificates that gamblers exchanged for cash. Speculation has been rife that the politicians had pressured the Culture Ministry and KMRB to allow several unqualified companies to have exclusive rights to distribute the gift certificates in gaming rooms across the nation.
President Roh Moo-hyun's nephew is implicated due to his involvement as a sales executive of Woojyun Systec until last month, the company that "The Sea Story" developers acquired for backdoor listing on the Kosdaq index.

Korea launched its first civil-military dual use communication satellite, Mugunghwa 5, from a US vessel in the South Pacific, opening the country's military satellite era. It will be placed in a 36,000 km high stationary orbit, covering China, Japan, the Philippines and Taiwan. Replacing the Mugunghwa 2, which will soon complete its mission after 9 years' operation, the new satellite comes with doubled capacity for communication. The satellite is closely integrated with the nation's plan to build a digital warfare system known as C4I (command, control, communication, computer and intelligence). The satellite is expected greatly to improve currently ground-based military communication networks and overcome the limitations of the current system.

Korea’s economy was ranked 12th in the world in terms of GDP at $788 bil last year, up 15.7% from 2004. Nation’s GNI per capita ranked 29th, GDP growth rate of 4% at 7th among OECD countries, total population 25th, shipbuilding capacity No 1, steel and auto production 5th, and internet user 3rd.
The nation's birthrate has again fallen to a record low, with the total fertility rate tumbled to 1.08 last year, down from the previous low of 1.16 in 2004. This compares with 2.05 of USA and 1.9 of France and with even Japan of 1.25. Korea's birthrate has been consistently declining over decades from 4.53 in 1970 to the current level. The aged population over 65 will make up 20% of the total population by 2026. As part of efforts to address the population problem, about KW30.5 tril will be spent over the next 5 years to strengthen the country's social safety net, including the expanding day care services and preschool education and improving child care facilities.
The per-capita consumption of the rice is likely to drop below 80 kg for the first time. An average Korean is likely to consume 78.7 kg of rice this year, compared with 80.7 kg a year ago, 82 kg in 2004, 83.2 kg in 2003, 87 kg in 2002 and 88.9 kg in 2001.
Sweet-swinging Lee Seung-yeop, the Yomiuri Giants first baseman in Japan, joined the exclusive 400 Home Run Club. 29-year-old Lee has smacked a league-leading 34 home runs for the Giants this season.

NORTH KOREA AND NATIONAL DEFENSE

International experts have collectively raised concerns about the prospects for the decades-long partnership between SKorea and USA as discord is widened, particularly on the policies toward NKorea. They blamed the trouble equally on both Washington and Seoul. Bush needs to be blamed for his excessive anti-NK stance and aggressive foreign policy styles that have not been able to propose a workable solution for NKorean nuclear issues. Roh should be blamed for its naive pro-NK stance, regardless Pyongyang’s brinkmanship diplomacy and vulgar anti-USA remarks. The way Roh coped with the latest missile crisis drew intense criticism from conservatives at home and abroad who questioned Seoul's loyalty to the alliance with Washington, and more importantly, its commitment to national security. Even after 7 ballistic missiles were fired, some of which are capable of hitting targets inside SKorea, Roh refused to acknowledge security risks posed by NK. His message to the world was that Seoul would persist in dialogue for communicating with Pyongyang.

NK canceled two festivals this month, such as the Arirang Festival, featuring its mass games, as well as an annual festival with SKorea to mark their independence from Japanese colonial rule, citing in one of the worst floods triggered by torrential downpours last month that reportedly left about 4,000 NKoreans injured or killed, while some 60,000 people were displaced. The government is facing growing calls to ease its position regarding emergency relief. The ruling Uri Party as well as opposition GNP urged the government to resume humanitarian aid, including food and medical supplies, to NK.
South and North Korea held working-level talks to discuss relief aid, as NK sent its first request to SKorea for help in recovering from devastating floods, detailing the items they need, such as cement and cargo trucks, to rebuild facilities, and food and medicine. The South decided to offer KW10 bil to NK via civic organizations in the first phase. In the second phase, the South is set to ship official aid supplies such as rice and equipment via the Red Cross. The SKorea initially stood firm against resuming general assistance, including rice and fertilizer aid, which it suspended after NK's missile test-fires. NK also previously rejected the Red Cross proposal for help, saying it can take care of itself.
NK allegedly earns $500-700 mil annually by selling fake cigarettes, which are produced from about 10 tobacco factories in the country.
The number of NKorean defectors entering SKorea rose 59% during the first half of this year compared with last year. A total of 1,054 NKoreans entered the South. The annual number of NKorean defectors was about 10 in the early 1990s, 100 in 1999 and 1,000 in 2002. A record-breaking number of defectors are to be seen by the end of the year.

Debate is heating up over SKorea's ongoing negotiations with USA to take back wartime military command of its forces. SKorea transferred control of its troops to USA, which led UN forces to help SKorea repel invading NKorean troops during the 1950-53 Korean War. The peacetime control of the military was handed back to South in 1994, under the condition that USA would take over the command if war breaks out. The Seoul government has pushed to regain to take back the control by 2012. The debate took another turn over on reports that Washington was considering speeding up the procedure to hand over the command by 2009. A group of former defense ministers called on the government to stop talks to regain wartime operational control, concerning it would weaken SKorea's deterrence against NK and its half-century alliance with USA. Their statement came one day after President Roh said the country's military is competent enough to exercise wartime control even if USA returns it immediately. The main opposition GNP criticized Roh's attitude as "an irresponsible adventure and security gambling," and stressed that the firm alliance with USA should be guaranteed for national defense, requesting a national consensus on the issue as a precondition to any changes being made. Critics believe it will take at least more than 10 years for SKorea to build sufficient warfare capability to deter NK.
US Secretary of Defense has reportedly sent a letter to his SKorean counterpart saying that USA would like to return the wartime operational control of SKorea's armed forces by 2009, and proposed SKorea to shoulder more of the cost of keeping 30,000 US troops stationed in Korea, raising its stake from 40% to 50%.
An annual Security Consultative Meeting is scheduled Oct 21 in Seoul, which plans to release a roadmap of the future command transfer, including the 4 principles, such as continued US support of intelligence assets, the allies' joint defense posture, war deterrence and cost sharing between the 2 countries. If USA gets its way, Korea's defense budget would increase tremendously. Presidents Roh and Bush are set to meet on Sept 14 in Washington and are most likely to discuss the timing of the command handover.
SKorea and USA began regular joint military drills amid heightened tensions after NKorean missile tests last month and recent reports that the North may be preparing to test a nuclear device. About 20,000 SKorean and US troops are participating in the annual computer-based exercise. NK called a joint military exercise "an act of war," saying it would take pre-emptive action if necessary in spite of the 53-year-old cease-fire treaty. 2 Koreas are still technically at war after the 1950-1953 Korean War that ended with a cease-fire treaty, not a peace treaty.

Most of the Chinese banks in Beijing and Shanghai have drastically downsized their business with NK. Some banks in Vietnam along with Singapore, China, Hong Kong and Mongolia have also stopped doing business with NK, apparently in line with the US warning against servicing NKorean accounts, which it claims are used to launder counterfeited US dollars and for other illicit activities. Washington, in last Sept, ordered American banks to stop dealing with the Macau-based, Banco Delta Asia, who froze the NKorean account worth $20 mil. Pyongyang responded by boycotting the six-way nuclear talks hosted by Beijing.
NK’s leader Kim Jong-il was reported to call their key allies China and Russia "unreliable," saying his country should overcome the international standoff over its nuclear and missile programs on its own. Kim's skepticism was expressed when top NKorean envoys gathered in Pyongyang last month, 3 days after the UN Security Council adopted a resolution imposing weapons-related sanctions on the North over its missile launches on July 5. China and Russia opposed the initial draft, but later acceded to a resolution, presented by the US and Japan, with modification.

ECONOMY AND POLICY

The economy grew 0.8%, the lowest in past 5 quarters, in second quarter this year, slowing from a 1.2% in first 3 months and a 1.6% in the last quarter in 2005. Some private think tanks have revised downwards the second-half growth rate to about 4%, compared to the 4.4% forecast by the government. Samsung Economic Research Institute warned the Korean economy peaked in the first quarter of the year and is now heading into a downturn and tougher times await in 2007, as a slowdown in the global economy, high oil prices and a firmer KWon threaten to dampen its trade and industry vitality. Warning that the Korean economy is losing steam faster than expected, Citigroup revised down the growth forecast for 2007 to 4.3% from 4.7%. Deutsche Bank, cast the more dismal outlook of 4% growth.
Fitch Ratings has revised Korea’s country ceiling upward to “AA” from “AA-.”

Korea's total volume of exports rose 18.7% in Aug on year, despite high oil prices and a firmer KWon. It is the largest advance in 3 months. Spurring optimism, the nation's real GNI expanded 1.4% in second quarter on quarter to KW171.9 tril.
The country's information-technology exports rose to their highest level of the year in Aug, backed by seasonal demand and brisk shipments of chips, flat panels, digital TVs and mobile handsets. IT exports rose 13.3% to $9.85 bil on year, which is the second-largest monthly volume after the $9.92 bil set last Nov.
The red lights are on for the exporter to China. The increasing rate of export to China has been lowered from 20% level to 10% in first half, further nose dived to 5% level in July, as China’s industry raised its self-supports ratio for steel and petrochemical products.
Battered by weakening profitability due to KWon's appreciation against the USDollar, the country has seen more than 8,800 exporting companies shut down in the first half of the year. The current figure represents a loss of 8,816 exporting firms since the record number of 30,199 listed in 1999. KWon has climbed 4.9% against USDollar.
Korea recorded a current account deficit of $268 mil in the first half of the year, the first deficit in 9 years, attributing mainly to a widening service account deficit. The nation's service sector deficit rose sharply to $8.88 bil in the first half, as demand for transportation services fell, and overseas travel and educational expenses climbed. The surplus in shipping and air delivery services contracted $1.2 bil to $890 mil, from a year ago. The increase in demand for overseas travel and overseas studies programs reached $1.28 bil to $5.79 bil.

Shinhan Financial Group was chosen as the preferred bidder to acquire a controlling stake in LG Card, the nation's second-largest credit card issuer. Shinhan was known to beat the other contenders, such as Hana Financial + MBK Partners consortium, National Agricultural Cooperatives Federation, and the Korean unit of Standard Chartered PLC, by offering better deals in price as well as nonprice categories. The total number of shares to be acquired and the stock price apiece are yet to be negotiated. Analysts estimate that Shinhan may acquire for the estimated bidding price of KW7.2 tril, making the deal the largest in Korea's financial industry, surpassing KW6.95 tril Kookmin Bank agreed to pay for the Korea Exchange Bank. The acquisition of LG Card would increase Shinhan Financial's assets to KW219 tril, which can be comparable with dominant player Kookmin Bank, whose assets are estimated to be around KW287 tril after completing the ongoing acquisition of KEB.

Korea and Uzbekistan signed a gas production sharing agreement on the $20 mil deal for Korea National Oil Corp to take a 20% stakes in the gas field in the Aral Seal. This share is equal to 18 months of the country’s average gas needs. The Aral field is estimated to hold a total of 8 tril cubic feet of gas. The actual gas production is expected to start in 2012.
Daewoo International has secured large-sized gas reserves in Myanmar, with the reserves upto 10 tril cft gas equivalent to 200 mil tons of LNG, 20 times of Korea's annual consumption, the largest aggregate of gas reserves to be developed by Korean explorers.

CHAEBOL

Samsung Electronics (SEC) retained the No1 position in the world dynamic random access memory (DRAM) chip market in the second quarter amid a healthy growth in demand. SEC sold DRAM chips worth $2.06 bil in the second quarter this year, up 13.8% on quarter. SEC’s global share stood at 27.8%. SEC ranked No 2 in mobile phone sales in North American market in second quarter, by selling 6 mil units with 15.5% market share, surpassing Nokia’s 5.2 mil of 13.5%. Motorola kept No 1 position to sell 16.9 mil units for 43.8% in the market.
SEC introduced the world's first touch-and-feel experience of fourth-generation wireless technology at the 2006 Samsung 4G Forum, demonstrating 100 megabit-per-second data transmission under mobile settings, in a bus moving at 60 km per hour.
US Sprint Nextel adopted SEC’s own technology “WiBro” as its platform of next generation telecommunication., offering a good chance for SEC to lead global standard for fourth generation mobile telecommunication technology. SEC also agreed on strategic alliance for cooperation and commercial service for the “WiBro” system with Sprint Nextel, Intel and Motorola.

Hyundai Motor's Chinese unit lost ground to archrival Toyota in June, a major defeat in almost 3 years, throwing a dark cloud over its ambition of playing a dominant role in the Chinese market. Hyundai sold 18,227 vehicles in China in June, sliding from fifth to seventh in the car sales rankings there. Toyota's Chinese unit, meanwhile, sold 20,014 vehicles during the same period, climbing 5 notches from 10th in May to fifth in June. Hyundai has led the market until June since it outsmarted the Japanese rival in June 2003. However, Toyota introduced new strategic models, in this spring, Camry and Carole, which have been about 20% more expensive than Hyundai's rivals, Sonata and Avante in USA market, but the price gap became 10% in China. HMC had set its annual sales target in China at around 300,000 units, but sold just 132,975 units in the first half of this year.
Hyundai Mobis, HMC’s car component producing subsidiary, began supplying complete chassis modules for 2007 Jeep Wrangler sport utility vehicles, to the Chrysler Group. The annual supply would amount to KW200 bil.
Hyundai Capital, financial affiliate of Hyundai Motor Group, plans to issue ABS of $500 mil for 5 years maturity. It will be the second substantial Issuance of ABS in Korea this year, since Samsung Credit Card issued $300 mil ABS in March.

The level of overseas construction order topped $10.5 bil as of end July this year, expecting $17 bil this whole year, the highest in its history.
Hyundai Engineering & Construction (HE&C) received an order valued at $775 mil to build a plant to liquefy natural gas from Qatar Shell GTL (gas to liquid). The construction of the plant will be completed by the end of Sept 2010, under the consortium with Toyo engineering. HHI also got GTL project from the same company for $510 mil with Chiyoda Corp of Japan.
Doosan Heavy made a contract with Korea Hydro Nuclear Power to supply atomic furnace and turbine generator to New Kori Plant for KW1.142 tril, equivalent to 34.5% of its annual sale. They will be delivered by Sept 2014.

Korean chipmakers secured better positions in their patent disputes with Rambus Inc, as the US Federal Trade Commission ruled that Rambus had engaged in "deceptive conduct" to control patents for computer chips. Rambus had launched a series of patent infringement lawsuits against major chip producers, including SEC and Hynix Semiconductor. Chip makers might avoid paying royalties to Rambus as a result of the ruling. SEC has stopped paying royalties to Rambus since 2005 when 2 firms clashed over the patent infringement.
A Chinese joint venture between Hynix Semiconductor and STMicroelectronics has raised $750 mil in syndicated loans to finance a new memory chip line construction.
Hynix Semiconductor decided to invest additional $250 mil to Eugene plant in Oregon, for the modernization of DRAM and Nand Flash production facilities.

The nation's petrochemical exports have jumped 50% on year, due to recent price hikes in plastics and a soaring global demand for them. Korean refineries and petrochemical makers have exported around $11 bil in the first 7 months of the year, compared to $7.4 bil last year. The gain mostly comes from the ever-rising costs of fuels and petrochemical products, together with the fast-growing demand from China and India. The average price for petrochemical products rose almost 37% on year.
Samsung Petrochemical signed the contract to supply TPA to Toray Saehan for KW184 bil, equivalent to 12.7% of its annual turnover.

MONETARY AND ECONOMIC INDICES

KOSPI started the month at 1287, easily broke 1300 despite BOK’s interest rate hike and foreign investors’ aggressive selling, and ended at 1352, thanks to eased oil price.
Kwon has been reasonably stable through the month, keeping exchange rate against USDollar in the range of 961-965, the highest level in 4 month.
BOK boldly raised the overnight call rate 0.25% to 4.5%, the highest since Sept 2001, shrugging off widespread concerns about an economic slowdown by increasing its key interest rate. The US Federal Reserve decided to freeze its interest rates at 5.25%, for the first time in 2 years. China's central bank raised the interest rate by 0.27% to 6.12%, as the second hike this year, but, unlike the one in April, both the lending and base deposit rates have been raised. European Central Bank raised basic interest rate by 0.25% to 3.0%, 4th hike in 9 months. The Foreign Reserves climbed by $1.31 bil to $227.0 bil in Aug.
The yield on 3 years corporate bond has been stabilized in the box of 5.07-5.13%. The nation’s jobless rate fell to 3.4% in July from 3.7% last year.
Dubai oil prices once skyrocketed breaking the barrier of $72 per barrel, reflecting the news on disruption in production of various fields, but nose-dived to $65.07 at the end of the month as hurricane passed avoiding dense population area.

SHIPBUILDING AND SHIPPING

Boom in shipbuilding industry continued smashing every negative forecast on over supply, as the sucking power in China continent is superior to any clog in the pipeline.
Korean shipbuilding industry recorded another brilliant performance in the first half of this year, taking the order for 228 ships of 9.61 mil CGT up 33.4% on year, and delivered 166 units of 5.74 mil, 17.5% increase, with the order book full of 1,042 vessels of 35.69 mil CGT.
The new building price stood firm, on the back of strong demand and stable steel cost, rising prices of engines and equipment, and softening USDollar and China’s strong economy, while the second hand prices of capesize bulkers and VLCCs are going through the roof. It was reported that Centrofin paid a $70m for a five-year-old capsize bulker and one year old VLCC was sold at $135 mil.
A rise in newbuilding prices in a high market and a glut of orders, Korean shipbuilders posted positive result this year. HHI recorded a fifth consecutive quarterly profit after heavy losses at the start of last year. Net profit rose from KW35.4 bil to KW192.4 bil in second quarter, almost 5.5 times that from the corresponding period last year on the sales of W2.97 tril, a 15% increase on year. HMD’s net income for second quarter was KW65.4 bil, compared with KW37 bil a year ago and KW43.5 bil in the first quarter. Its sales grew 13% to KW569.3 bil, compared to KW534.4 bil in the first quarter. DSME also jumped back into the black in the second quarter, posting net income of KW100.4 bil, significant improvement from a loss of KW11.95 bil in the second quarter last year and a loss of KW45.04 bil in the first quarter this year. Its sales of KW1.265 tril were up on last year’s second quarter and on the first quarter this year of KW1.25 tril and KW1.184 tril respectively. SHI also improved its result in the first half, with the net profit of KW47.5 bil, on the sale of KW3.63 tril up 14.2% on year. Hanjin doubled its net profit in the first half, posting KW45.8 bil from last year’s KW20.2 bil, on the sale of KW1.144 tril from KW1.075 tril. Daesun has continued to make profit in the first half with net earnings climbed to KW10.32 bil, compared to KW759 mil in the same half last year. Revenues rose to KW56.9 bil from KW44.44 bil in 2005.

HHI got the order from Marmaras Nav and Alpha Tankers&Freighters for 3 units each x 160K Suezmax tanker, Teekay Shipping 2 x 160K under negotiation, SK Shipping 2 x 115K pc + 1 x 82K VLGC, Seaspan 4 x 5100 teu container ship, Minerva and Athenian 2 each x VLCC, Kawasaki Kisen 4 x 4250 teu, Geogas Trading 1+1 x 22.5K LPG, and Metrostar and Emirates Trading 2 each x 310K VLCCs and 2 x 105K coated aframaxes.
HHI secured a $110 mil order to supply marine engines to China's Shanghai Chengxi Shipyard group, for the delivery of 77 units between April 2007 - July 2009. It is the largest single order HHI has received since it launched its engine production unit in 1979. HHI has a 35% share of the world’s ship engine market, with annual capacity amounting to 200 large-sized and 800 mid-sized units with a combined 12 mil horsepower.
HMD received order from Eletson for 4+2 x 52K pc, Interorient 2 x 47K MR pc, Bernhard Schulte 2+2 x 20.5K semi-refrigerated LPG carriers.

DSME secured orders from Bergesen WorldWide for 1 x 84K VLGC, Stealth Gas 2 x 84K VLGC, and Daewoo Mangalia agreed with Norddeutsche Buxtehude + Gebab to build 3 units each x Panamax containerships, and Hamburg Sud 6 x 5,560 teu. DSME signed the contract with Chevron’s Cabinda to build 1 x Drilling and Production Platform, with daily capacity of 130,000 barrel of crude, at $1.27 bil, for the delivery of 5/2009. It is the biggest ever built in the world, the price of which is equivalent to 25.9% of annual turnover of the yard.
As the creditors of DSME plan to sell out the world second largest shipyard, POSCO has been considered as the likeliest suitor because of its deeper pockets than other prospective bidders such as STX Shipbuilding, Doosan Heavy and Hanjin Heavy Ind, and a synergy effect to guarantee a market for its steel in the face of competition from China.
DSME agreed on a long-term deal with the Oman government to build a new $200 mil ship repair yard. It is also eyeing up opportunities for offshore facilities in Nigeria as part of its Global Network Strategy plan and aims to diversify into other business sectors.

SHI signed the contract with Hanjin Shipping for 5 x 10,000 teu, the largest containerships ever ordered by Korean owner, and Chandris 2 x 159K tanker. SHI raised its target for new building orders this year by 56%, after the company won contracts valued at a record $10.1 bil as of end Aug this year. SHI expects to win $12 bil of orders this year, an increase from its earlier forecast of $7.7 bil, same level as last year.
Hanjin bagged orders from CMA CGM for 4 x 6,500 teu and AP Moeller 2 x 3100 teu container ships. STX also collected the orders from NYK for 2+2 x 2,700-teu, and Aktif Denizcilik 1 x 115K LR2 tanker.
Shin-A Shipbuilding has been renamed SLS Shipbuilding after a new investor’s name who secured 80% stake in yard. The investor has been engaged in machine manufacturing and the locomotive sector. Yoo Su-Eun retains his position as chairman and PD Sohn will keep his role as sales executive.
Sungdong added its order book with Danaos for 5 x 6500 teu, Byzantine Maritime 2 x 75K pc, and in nego with Kristen Navigation for 6 x 115K tankers. SPP got Target Marine for 6 x 51K pc, Daesun with Cosmoship and Reederei Jorg Kopping for 2 each x 1,049 teu, and INP with Primera Maritim for 2 x 13K chemical carriers. Samho yard is to build 3 x 5.6K chemical carrier for its mother company Samho shipping. 21C Shipbuilding agreed to build for Daelim H&L 1 x 13K chemical carrier.

John Fredriksen is facing a demand to return part of the profit made from a short term investment in HMM, who claims that Fredriksen’s Geveran Trading is obliged to return 25% of the investment gain it made, as Korean regulators regard anyone who owns 10% or more of a listed company as an insider subject to restrictions on the gains they make on shares held for less than 6 months. Geveran acquired a 13.9% stake in HMM during Oct 2005 - April 2006. HMM is attempting to freeze investments that Fredriksen has in other shipping companies in Korea as security for its claim of some KW11.5 bil.
Hanjin Shipping opened 10,000 teu era by ordering 5 x 10,000 teu containerships at SHI, for the deployment on its trans-Pacific routes from Feb 2010. Golar LNG’s Geveran Trading increased its stake in Hanjin Shipping from 7.48% to 8.7%, after it added 1.04% to 7.48% in July.

HMM reported a big downturn in second quarter profit due to lower liner shipping rates, high bunker costs and strengthened KWon. Net profit fell to KW4.6 bil from KW77 bil in the same period of last year, on the sale of KW1.951 tril. Hanjin also posted in second quarter shrunken net profit of KW33.7 bil down 50.7%, on the sale of KW2.92 tril up 0.8% on year.
KLC reported first half earnings of KW48.1 bil, 46% down, on revenues of KW539.9 bil down 6% on year. SK Shipping posted, in the first half, shrunken operational profit of KW44.4 bil down 26.85% due to increased fuel cost, and increased net profit KW79.9 bil up 148.91% thanks to the gain from forex exchange, on the sale of KW805.9 bil, up 5.03% on year. Heung-A made a KW1.38 bil loss for the first half of this year, against a net profit of KW14.34 bil in the same period last year. Revenues dropped 1% on year to KW255.24 bil.