Hyundai Mipo Dockyard, the world's fifth largest shipbuilder will benefit from increased small-ship scrapping, a South Korean brokerage said Thursday.
"The biggest beneficiary of the rising scrap rates will be Mipo, as most of the old vessels being scrapped are small ones, which are Mipo's specialty," Lee Sok-je, a shipbuilding analyst at Mirae Asset Securities, said in a report.
In the first three months of 2011, the number of bulk carriers scrapped has quadrupled on-year, amounting to 4.3 million deadweight tons, according to the report. The scrap volume in the first quarter reached as much as 82 percent of that for the whole 2010 and was the third-largest quarterly scrapping volume in history.
Mirae Asset expected the scrapping cycle to speed up, led by small bulk carriers going forward because the portion of ships over 15 years old is largest among small bulk carriers and the upcoming regulations on carbon dioxide emissions is forcing inefficient vessels out of the market.
"Ship owners have to consider replacing their old vessels ahead of further rallying of new building prices supported by higher steel prices and strengthening Asian currencies," Lee said.
Hyundai Mipo has been regarded as a PC tanker-focused shipyard, but it actually builds every type of small ships ranging from bulk carriers to LPG carriers, Lee said, stressing that the South Korean shipyard has the strength of flexibility in its product mix which competitors can not match.
"Hyundai Mipo can change its product mix frequently in line with market demand to maximize its profitability," Lee added.
Source: Xinhua. April 14, 2011
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