Hyundai Heavy Industries loses $1.44 bn ship order to China

Hyundai Heavy IndustriesSouth Korea’s largest shipbuilder Hyundai Heavy Industries Co. received a surprise setback, losing a $1.44 billion container ship deal to two Chinese rivals.

CMA CGM, the French container transportation and shipping company, placed orders with China’s Hudong Zhounghua Shipbuilding Co. and Shanghai Waigaoqiao Shipbuilding Co. for nine container vessels with the world’s largest capacity of 22,000 twenty-foot equivalent units (TEU).

According to industry insiders, Hyundai Heavy Industries was sure of winning the deal. Earlier this month, it had mentioned during its second-quarter earnings conference call that it was in the final stage of vying against China for an order of ultra-large container ships and was confident of delivering good news.

Pricing would have been the primary losing factor, industry experts said.

“The client was seeking $160 million per vessel with a dual-fuel option, but Korean shipbuilders offer such vessel at $175 million,” said Yang Hyeong-mo, analyst at eBest Investment & Securities Co.

Shipping financing from the Chinese government and the fact that the French shipper was on the same shipping alliance with China Ocean Shipping Co. (COSCO) could have been other winning factors for the Chinese builder, they said.

The defeat has hurt the pride of Korean shipyards as they prize themselves the best in super-big ships with cutting-edge engine that could run on both natural gas and bunker fuel.

Many Korean engineers have been scouted to Chinese shipyards due to last year’s restructuring in Korean dockyards. The Chinese shipbuilding technology can no longer be underestimated, the industry observers said.

As of 12:56 p.m., shares of Hyundai Heavy were down 1.6 percent at 153,500 won.

The Original Posed By Moon Ji-woong/Maeil News Korea