Page 36: of Maritime Reporter Magazine (April 1998)

FAR EAST UPDATE

That Empty Feeling

The Asian financial crisis has turned the Korean shipbuilding market upside down with news of closuresconsolidations and cancellations. If the tanker market is over-ordered, as many speculate, more changes are sure to come. — by Alan Thorpe, international editor

The financial crisis in the Far East has had an immediate effect upon the

South Korean shipbuild- ing industry, especially

Halla Engineering &

Heavy Industries, which is now court protected.

During the early part of this year the yard was dealt a severe blow by the cancellation of an order for four products tankers worth $130 million.

The 45,000-dwt vessels were contracted by

Norway's Benor Tankers and Yukong Line, now known as SK Group. Benor, which was respon- sible for two vessels, blamed financial problems on Halla. The company has repaid around $23 million on the vessels. The vessels were intend- ed for a pool to which SK Group was also due to contribute two vessels. According to Benor, SK had also rescinded its order for two 45,000 dwt products tankers. Earlier this year, both

Hyundai Heavy Industries and various

Singapore-based shipyards ended speculation of a take-over of

With orders during 1997 of more than 32 million dwt accounting for all of the increase in the total world orderbook, fears have been sparked that the tanker industry is over- ordering, and thus in dan- ger of upsetting the deli- cate balance of supply and demand.

Halla. South Korea may be moving clos- er to a significant realignment of its shipbuilding indus- try. Senior execu- tives of the coun- try's five leading conglomerates have agreed to discuss the exchange of assets as part of a broader restructur- ing program, according to a senior adviser to President Elect

Kim Dae jung. Hyundai, Samsung, DHI, LG and Sunkyong will discuss "big deals" between the groups, said Kim Won gil, chief policymak- er of the national Congress for New Politics, the president elect's party. Despite these problems,

South Korea is set to become the world's largest shipbuilding nation, replacing Japan which has held the top position since 1983. South Korean shipbuilders received contracts for the con- struction of 189 export ships, aggregating 12.2 million grt in this fiscal year's January to

November period, while Japanese yards secured orders for 273 exports ships of just over 11 million grt during the same period.

Orders from foreign owners and overseas- registered subsidiaries of Japanese companies soared at Japanese yards last year. The

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