Hyundai Heavy Announces Biggest Container-Vessel Order in a Year

Hyundai Heavy Industries Co. (009540), the world’s biggest shipbuilder, won an order to build 10 mega- container vessels for $1.2 billion, the biggest new contract for the type industrywide in a year.

The vessels, each able to hold 13,800 20-foot boxes, will be operated by Evergreen Group, the Ulsan, South Korea-based shipbuilder said in a statement today. Evergreen will lease the vessels from Enesel SA, the Taiwanese shipping line said separately. Deliveries are due to start in the second half of next year.

Hyundai Heavy rose the most in three weeks in Seoul trading on speculation the order may mark a revival in demand for new ships following a slump caused by slower trade, reduced availability of financing and lower charter rates. Global ship orders dropped 39 percent from a year earlier in the first five months of the year to 16.5 million deadweight tons, according to data compiled by shipbroker Clarkson Plc. (CKN)

“This order could be a signal that things could be bottoming out for the shipbuilding industry,” said Lee Jae Won, an analyst at Tong Yang Securities Inc. in Seoul.

Hyundai Heavy advanced as much as 3.7 percent, the most since June 11, to 266,000 won and traded at 265,500 won as of 11:55 a.m. in Seoul. Evergreen Marine Corp. dropped as much as 1.6 percent, the biggest decline in about a month, to NT$15.90 in Taipei.

Big Ships

Evergreen will join lines including A.P. Moeller-Maersk A/S and Neptune Orient Lines Ltd. in adding mega-container vessels as operators strive to pare costs by using more fuel-efficient ships. Bunker fuel prices have risen 39 percent in the past two years, according to data compiled by Bloomberg.

Maersk, the biggest container-shipping company, has ordered 20 vessels able to carry 18,000 boxes apiece. The ships, which will be the largest afloat, will cut costs by 26 percent per boxes compared with current vessels, according to the Copenhagen-based company. The first two are due to be delivered by Daewoo Shipbuilding & Marine Engineering Co. next year.

Worldwide, orders for vessels able to carry more than 8,000 containers account for 72 percent of the current total backlog by capacity, according to Clarkson data.

STX Offshore & Shipbuilding Co., the world’s fourth-biggest shipyard, had a contract revised in November to build six ships that can each carry 16,000 boxes from an earlier order for 13,000. The deal includes an option to order four more vessels.

A Hyundai Heavy unit received a $1.3 billion order from Neptune Orient in June last year to build 10 vessels that can each carry 13,900 boxes.

To contact the reporters on this story: Kyunghee Park in Singapore at kpark3@bloomberg.net; Yu-Huay Sun in Taipei at ysun7@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net

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