Hyundai to raise ship prices

Hyundai Heavy Industries Co., the world’s largest shipbuilder, intends to raise prices as demand for fuel-efficient vessels helps it offset the global crisis hurting Chinese yards. Company forecasts orders to exceed target of $11.3 billion.

“The big focus right now is on fuel efficiency,” Ka Sam Hyun, executive vice president in charge of ship sales said for Bloomberg. “At a time when prices have fallen so much, shipping lines seem to be willing to pay a bit more to get better performing ships on time. This is why the top-tier shipyards will benefit.”

Shipbuilders shares surged in todays trading in Seoul, while their Chinese rivals were struggling. At least a third of China’s shipyards may shut down in five years as they struggle to win orders, an industry group said last week. South Korean yards, which dominate the construction of mega ships, are benefiting from bigger fuel efficient ships.

Hyundai Heavy rose 3.4% in Seoul trading, compensating its year’s drop to 24%. Hyundai Mipo Dockyard Co. surged 4.9%, Samsung Heavy Industries Co. advanced 3.6% and Daewoo Shipbuilding & Marine Engineering Co. advanced 3.3%.

South-Korean ships have some advantages over its rivals as an engine that can automatically control fuel consumption to suit speed and sea conditions, helping improve fuel efficiency while reducing emissions and noise. “We see more orders for bigger ships made by Korean companies,” said for Bloomberg Sarah Wang, a Shanghai-based analyst at Masterlink Securities Corp. Shipping lines “require higher levels of technology and fuel efficiency to cut costs,” Wang said.

According to analysts, China is turning to offshore ships as the country cant compete anymore with growing competition and technology which happens to be a great opportunity for the South-Korean shipbuilders.

Furthermore, Chinese shipyards are suffering as orders have vanished due to the global excess of commodities. The surplus fleet and a global economic downturn diminished cargo rates and discouraged owners from ordering more vessels.