Slump drives Hyundai to slash its capacity

Hyundai Heavy Industries (HHI) is set to slash its production capacity by more than 30% in response to the global slump in orders, according to industry sources.

News ID: 68931

Date: 18 September 2016 - 16:05

According to MANA,Shipbuilding players say yard capacity will be withdrawn from the market at HHI’s three yards, including the main Ulsan facility, Gunsan shipyard and Hyundai Samho Heavy Industries.
They add that the Ulsan yard has already closed down its No4 drydock, while the No5 drydock will cease operation by the end of this year.
According to figures from broker Clarksons, only 21 million dwt of vessels has been ordered this year — down 67% on last year’s level.
HHI is by far the most influential shipbuilder in the market with a maximum production capacity of 12 million dwt per year at its Ulsan facility, 5.6 million dwt at Hyundai Samho and 2.4 million dwt at Gunsan.
By comparison, the second-largest shipbuilder, DSME, has a maximum capacity of 9.7 million dwt.
On average, the total number of vessels that HHI is able to deliver in a year is more than 155 units, with Ulsan being the major producer of around 100 ships, followed by Hyundai Samho with around 45 vessels and Gunsan on eight to 10 units.
Ulsan’s No4 and No5 drydocks are dedicated to building aframax-size vessels. Together, the two drydocks can produce more than 20 vessels per year.
Gunsan, which is equipped with one 700-metre-long drydock, has the capacity to construct 20 vessels per year but has only delivered half that number so far.
The company has reined back its business expectations this year, targeting $16.7bn of orders compared to $19bn last year. while it is scheduled to deliver 71 vessels in 2016.