South Korea’s SPP Shipbuilding may exit the ship-construction industry after it delivers its last newbuilding early next year.
Informed sources say the future of the Korean shipbuilder looks bleak as it has failed to secure any new contracts over the past two years. Only six medium-range (MR) products tankers — for delivery between now and February — remain in its orderbook.
Shipping companies that have vessels under construction at SPP are Navig8, Parakou Shipping, Yasa Shipping and Pyxis Maritime.
Sources say SPP’s creditors are planning to hold a public auction of the shipyard early next year.
SPP has been up for sale since last year after being under the control of lenders for six years.
SM Group, which owns Korea Line Corp (KLC), was keen to buy the yard. However, it did not proceed because of the price.
A source familiar with SPP confirms the shipyard’s thin orders backlog, saying poor demand for newbuildings and conditions set by the yard’s creditors made it difficult to seal new deals.
“Creditors of SPP did not allow the yard to enter low-price newbuilding projects and this prevented the yard from contracting new orders,” said the source.
Navig8 is believed to be the last shipping company to place newbuildings there. The owner booked four 74,000-dwt products tankers in early 2014 and since has taken delivery of three vessels. The last newbuilding is due at the end of this year.
SPP has three shipbuilding facilities — Sacheon, Tongyeong and Goseong — as well as an outfitting quay at Deokpo. Sacheon is the headquarters and employs slightly more than 300 yard workers. It is also the only facility that is still in operation. SPP turned the Tongyeong and Goseong facilities into block-making factories two years ago but sources say they are completely closed down now.
“Restructuring at SPP in terms of manpower is still ongoing because of the ships on order there,” said the source. “The yard is keeping a minimum staff level.”
SPP previously was known as Dongyang Heavy Industry, producing mega-blocks for major domestic shipbuilders. It entered shipbuilding in October 2004 when it secured orders for four MR tankers from Geden Lines of Turkey.
According to London broker Clarksons’ Shipping Intelligence Network, SPP has delivered more than 300 ships during the past 12 years. At its peak, the yard was able to deliver close to 50 vessels per year.
