South Korean shipbuilders weigh US$6.5 billion cost of Ukraine crisis, but could China reap the benefits?
- South Korean and Chinese shipbuilders rank among the industry’s top players, but the industry is under pressure from the coronavirus and Russia’s invasion of Ukraine
- Korean firms face the risk of delayed payments after Seoul backed Western sanctions against Russia, while Chinese firms could benefit from Beijing’s stance
Russia’s invasion of Ukraine, which has added to disruptions caused by the ongoing coronavirus pandemic, has created increasing uncertainty for most industries, with shipbuilding one of them.
South Korean and Chinese shipbuilders rank among the industry’s top players, and as tensions are growing, the impact of the geopolitical decisions made in both Seoul and Beijing over the Ukraine crisis are starting to filter through.
Shipbuilders could also encounter problems in securing new contracts with Russian owners, as well as the growing competition from China, after South Korea was listed as an “unfriendly” country by the Kremlin earlier this month.
Moscow has indicated that firms in countries on the list would need to obtain its approval for business transactions.
“Russia-linked orders are heavily focused on liquefied natural gas ships from Korean yards, with Samsung Heavy Industries the most exposed,” said Adam Kent, managing director at Maritime Strategies International.
He did note that the immediate impact on the global shipping industry would likely be minimal, given ships linked to Russia account for only 2.5 per cent of the global order book.
Samsung Heavy Industries is reported to be delaying the delivery of two liquefied natural gas (LNG) carriers that are due this month.