South Korea’s three major shipbuilders are expected to benefit from the misfortunes of their Chinese rivals whose operations have been crippled since the new coronavirus broke out from central Chinese city of Wuhan.

Local analysts forecast that the country’s big three shipbuilders – Korea Shipbuilding & Offshore Engineering Co. (KSOE, formerly Hyundai Heavy Industries), Samsung Heavy Industries Co. (SHI) and Daewoo Shipbuilding & Marine Engineering Co. (DSME), would see a surge in order book this year as they could snatch the new orders that could otherwise have gone to price-competitive dockyards in China.

Chinese companies are scheduled to resume production on Monday in accordance with guidelines from authorities after they were forced to stay closed two extra weeks on the heels of the Chinese New Year’s break to contain the spread. But many aren’t likely to normalize business for some weeks.

Choi Gwang-sik, an analyst from Hi Investment & Securities, said some Chinese shipyards reportedly informed their customers on possible delays in deliveries.

Korean shipyards have already been off to a good start this year, with growing odds in winning large-scale liquefied natural gas (LNG) project in Qatar and Mozambique and benefiting from LNG activity in U.S. led by increased shale development.

Hwang Eo-yeon, an analyst at Shinahan Financial Investment Co., said KSOE could bag as many as 25 orders for LNG carriers this year. The price tag for an LNG ship averages around 200 billion won ($168.2 million).

The demand for LNG carriers has been soaring due to tougher environment regulations of the International Maritime Organization (IMO) that requires vessels to use fuels that contain less than 0.5 percent of sulfur by weight or install a scrubber, a device that cleans exhaust gases.

Many governments ban the use of open-loop scrubbers because they release pollutants back in the sea. This would lead ship owners to switch fuels to eco-friendly LNG or liquefied petroleum gas (LPG), market analysts expected.

The recent volatility of stock prices in Korean shipyards has reflected such expectations, analysts said. Their shares closed last Friday down 2.34 percent, 2.48 percent and 1.17 percent, respectively, on Feb. 7, after soaring six to 12 percent in the previous day.

As of 12:02 p.m. on Monday, shares of KSOE rose 0.41 percent to 121,000 won, SHI up 0.6 percent to 6,720 and DSME down 0.2 percent to 25,400 won.

Amid the bright outlook, SHI set its order target at $8.4 billion this year, higher than $7.8 billion in 2019. KSOE said it is highly likely to achieve this year’s order target at $15.9 billion after it failed to meet the same target last year.

Seoul-based market tracker FnGuide estimated revenue of KSOE to grow 6 percent and SHI 4 percent this year. SHI that has been in the red for five consecutive years is expected to swing back to a profit at the end of the year.

By Woo Je-yoon and Choi Mira

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]