Shipbuilders and shipyards Message Board

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Non-Tech : Shipbuilders and shipyards

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To: Lynn who wrote (54)	6/2/2008 9:56:56 AM
From: Lynn	of 61

Flash: Korean Shipbuilding Idustries Change of Industry Trends - Crash of Gantry Cranes in Hudong (C) 2 June 2008 - 9 pages * Who is Hudong Zhonghua- - Hudong Zhonghua is the No. 1 shipbuilding technology leader in China with one LNG carrier delivery (but 6 month delayed), and has similar product mix as Korean yards. Hudong delivered 19 vessels (560,000 CGT) in 2007, and ranks No. 3 capacity in China, with 1.6% of the global market share. * Operational risks starting from the leader in China - Two 600 ton cranes crashed while lifting a 900 ton block, resulting in up to a 1 year delay. The crash is not included in 'Force Majeure', and thus Hudong may have to pay penalties and face cancellations. We expect the concern will spread to other shipyards in China as it started from the technology leader in China. * Bigger burden to ship owners - Ship owners, when they sign new building contracts, charter out the vessels at the same time. The unexpected delay can incur huge cash costs and penalties to ship owners as well. For ship owners, increasing uncertainty of deliveries from Chinese yards can incur much bigger cash cost than small cost savings, in our view. * Fast change of industry trends and sentiments - In the shipbuilding industry, timely delivery is the most important factor but has in the past been largely neglected. We believe the accident and increasing delay from the leading Chinese yard is a clear catalyst for Korean yards to charge larger premiums for their timely deliveries. Already, Korean yards are revising their sales plans as they see the fast changing sentiment of ship owners.

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