Korean yards suffer most cancellations

 Research from Norwegian classification society Det Norske Veritas estimated that more than 19.2m dwt on order at South Korea’s yards would not be built, representing 39.4% of the total 492 ships cancelled globally.
The country’s financially-troubled shipyard C& Heavy Industries has had the largest number of orders annulled, with 49 vessels totalling 4.5m dwt counted as cancelled.
The other top three yards in DNV’s list were South Korea’s Jinse Shipbuilding, formed two years ago, with 24 ships of 776,000 dwt cancelled, and Daehan Shipbuilding, with 23 vessels of 3.9m dwt cancelled.
Daehan Shipbuilding was given a Won170bn (US$125.3m) lifeline by its main creditor Korea Development Bank last month.
Chinese yards were second in DNV’s cancellation lists, with 161 newbuilding contracts representing 12.9m dwt not going ahead.
Taizhou Sanfu Ship Engineering in China had 20 ships cancelled of 1.2m dwt, while Vietnamese yard Hyundai-Vinashin Shipyard was fifth on the list, with 18 ships of 1m dwt, and was the only yard in the country to have had vessels cancelled.
DNV has estimated that in total, 492 ships have been cancelled, totalling 37m dwt, from the global orderbook of 10,355 vessels.
This figure includes 325 dry bulk carriers, 78 containership and 47 tanker orders. DNV senior vice-president Wilhelm Magelssen presented the data to delegates at a conference in London last week.
With 59% of bulk carriers on order at greenfield and non-established yards, it was much easier for owners to walk away compared to tankers and containerships contracted at “good” yards, he said.
“To do a cancellation is quite costly and the big yards are saying no,” Mr Magelssen said.
DNV has forecast that 30% of bulk carrier and container orders, and 10% of tanker newbuldings will be cancelled from the global orderbook.
“We have a surplus of tonnage whether we like it or not. This would still have been the case without the financial crisis,” Mr Magelssen said.
He also stressed that scrapping and laying up ships would be extremely important for any recovery of the shipping market.
“If people work together, I am sure the crisis could be shortened,” he told delegates.
The classification society has predicted that newbuilding delays will stand at 25% in total this year, 30% in 2010 and will drop to 20% in 2011.
Over 1,000 ships equating to 30m dwt will be sold for scrap this year, and the same amount in 2010 too, Mr Magelssen said.
By 2011 ship recycling levels were expected to drop to 800 vessels of around 20m dwt per year though until 2013. DNV has also predicted that there are around 900 ships idle around the world, including 100 bulk carriers and 486 containerships.