The Korea Herald

ssg
소아쌤

Steelmakers face growing risks due to ailing shipbuilding sector

By 박한나

Published : Sept. 29, 2016 - 17:26

    • Link copied

[THE INVESTOR] South Korea’s steelmakers have to map out self-restructuring measures as their margins are expected to shrink due to lack of new shipbuilding orders, an analyst at Korea Investors Service, a credit rating agency, said on Sept. 29.

“Shipyards’ volume of shipbuilding will decline sharply from next year as new orders dry up,” said Jeon Ji-hoon, senior analyst at KIS, at a press conference in Seoul.

Korean steelmakers will face further oversupply risks from shipbuilders’ deteriorating earnings as they are major suppliers of vessel making materials such as thick steel plates. 



According to the agency, the production volume of local shipbuilders is expected to decrease 6.9 percent on-year in the first half of 2017,

Jeon said companies that produce thick plates and steel pipes need to revamp their business to deal with falling demand.

Currently, only three steel manufactures -- POSCO, Hyundai Steel and Dongkuk Steel -- produce thick plates in the country and they all have logged losses.

Meanwhile, the government will announce a set of measures aimed at improving the competitiveness of troubled sectors including steelmaking companies and chemical firms on Sept. 30.

By Park Han-na (hnpark@heraldcorp.com)