Samsung Heavy Industries has made its debut into the MR product tanker segment.
The South Korean shipbuilder's main Koje yard, which has been building commercial vessels of panamax size and larger, has secured an order from Mitsui & Co for a series of 50,000-dwt product carriers, shipbuilding sources said.
The Japanese trading house has signed up for five vessels. It is unclear if the deal includes any optional ships.
“Samsung’s Koje shipyard has been focusing on building vessels beyond panamax size since it was founded in 1974, although its Chinese shipyard in Ningbo is constructing some MR tankers,” said one shipbuilding expert. “Samsung only started marketing MR tankers for its Koje facility six months ago.”
An SHI executive told TradeWinds that the MR tanker ship-type may be included in its portfolio, but it will not be the main product.
“MR tankers are not Samsung’s priority and contracting the vessels will largely depend on situation, for example utilisation of our docks, price level and if the order is for a series of ships, as it would lift production efficiency,” said the executive.
When asked to confirm Mitsui’s newbuilding order, the SHI executive declined to comment, citing contract confidentiality. An official at Mitsui also declined to comment.
Shipbuilding sources said Mitsui’s newbuildings will meet the IMO's new Tier-III emissions standards. The ships are said to be costing between $35m and $36m apiece and are slated for delivery in 2020.
Charters attached
Mitsui is said to have ordered the vessels against long-term charters from US energy giant Chevron, which is taking two vessels, and compatriot commodities trader Cargill, which will charter three.
Details of the charter deals have not been disclosed, but Cargill has confirmed that it has signed an agreement with Mitsui for its trio.
“It makes sense for us to expand our product tanker fleet. We have a lot of experience in this sector and we think market will improve in the years ahead,” said Jan Dieleman.
A source said the project will involve cooperation between Samsung Koje and Samsung Ningbo that will see the Chinese subsidiary supply blocks to its South Korean counterpart.
Samsung Ningbo was established in 1995 as a block maker. But it diversified into shipbuilding six years ago, when it constructed a 17,000-dwt heavylift cargoship for a South Korean owner.
It landed its first MR tanker deal in 2013, when Greek shipowner Evangelos Marinakis booked eight vessels there. The yard has since delivered the tankers. It is currently busy building a series of 50,000-dwt product carriers for Maersk Tankers.
In April, SHI reported a net loss of KRW 58.8bn ($54.6m) in the first quarter. Its revenue was down 49% to KRW 1.24 trillion.
In the wake of the results, CIMB Securities shipbuilding analyst KJ Hwang said he believed the poor results were due to low ship construction volume and higher fixed costs, coupled with currency woes and rising steel plate prices.
He added that the worst should be over for SHI and predicted the yard would post $7bn in new orders this year — $5bn from shipbuilding and $2bn from offshore.
SHI recently received orders for four suezmax shuttle tankers worth a total of $364m from AET. The shipbuilder is also poised to sign a newbuilding contract with domestic owner Hyundai Merchant Marine for five 23,000-teu containerships for delivery in the second quarter of 2020.
