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Daewoo wins $2b Maersk order to build 10 container vessels

Talks are in progress for a second order of similar size

Image Credit: Bloomberg
A ship under construction in the dry dock at the Daewoo Shipbuilding and Marine Engineering (DSME) shipyard in Geoje, South Korea. DSME, theworld’s third-largest shipyard, has won a $2 billion order from AP Moeller-Maersk to build 10 of the world’s biggest type of container ships.
Gulf News

Hong Kong/Seoul: Daewoo Shipbuilding and Marine Engineering has won a $2 billion (Dh7.34 billion) order from AP Moeller-Maersk to build 10 of the world's biggest type of container ships, a source said yesterday, prompting a jump in the Korean firm's shares.

Daewoo is in talks to build a further 10 of the ships for Maersk, the owner of the world's largest container shipping firm, which would mean a total order worth $4 billion and mark the shipbuilder's biggest ever single order.

Daewoo shares jumped more than 8 per cent and sent other Korean shipbuilders higher as the news was seen as a sign of confidence in the outlook for trade and raising hopes that further orders would follow.

"The deal has been signed and they are preparing for details ahead of a public announcement expected next week," said the source, who declined to be identified because the deal had not been made public.

Both Daewoo and Maersk declined to comment.

Maersk Line's North Asia chief, Tim Smith, hinted a news conference on Monday in Hong Kong would reveal the company's business plans in Asia.

Daewoo has said it wants to secure $6 billion in shipbuilding orders this year, so a $4 billion deal with Maersk would be a shot in the arm for the business so early in the year. Under the deal, Daewoo will build 10 container ships with a capacity to carry 18,000 twenty-foot-equivalent containers, the largest type of ship available in the sector. The additional 10 ships would be similar vessels.

Analysts said such large ships would most likely be used on trade between Europe and Asia, which have the ports that can accommodate such large vessels.

Tan Hua Joo, an analyst at shipping consultant Alphaliner, said the deal represented a big win for Daewoo because since 1996 Maersk had built its biggest ships in Denmark.

If Daewoo completes the deal, it would be its largest ever single order after one for $2.3 billion from Maersk in 2008.

Shares in Daewoo, the world's number 2 shipyard by number of deliveries, rose more than 8 per cent before closing 5.7 per cent higher on the news on volume that was nearly two times the 30-day average.

South Korean shipbuilders jumped 5 per cent on a positive order outlook. The world's top shipbuilder, Hyundai Heavy Industries , rose 2.7 per cent and Samsung Heavy Industries gained 6.3 per cent.

The news was taken in Korea's stock market as a boost of confidence for the shipping industry and the global trade outlook following the financial crisis.