STX sees green shoots of recovery

STX Group claims new ship orders could resume in the second half of this year when financing difficulties ease. Its shipbuilding arm, STX Shipbuilding, is aiming to boost new orders for offshore vessels and plants by 8% this year to $1.8 billion, vice chairman Lee Jong-chul told reporters.

New ship orders have vanished since the fourth quarter of 2008 due to the credit squeeze, and STX Shipbuilding is negotiating delivery delays or changes in ship types for buyers facing funding problems, Lee said. “Once orders start to come in again, top-tier shipbuilders in South Korea could see their gap over their rivals widen,” Lee said, adding that Japanese rivals were taking a hit from the strong yen.

Reflecting the industry downturn, prices of steel plates used in shipbuilding were seen falling further in the second half, Lee said. South Korea’s Dongkuk Steel, the country’s No.2 ship plate supplier, cut prices by 18% in January to reflect a sharp fall in raw material prices. Bigger rivals such as world No. 4 POSCO are also expected to cut plate prices later this year once ongoing talks over iron ore term prices are concluded.

Lee also said STX Group planned an initial public offering for Norway-based STX Europe, formerly Aker Yards, for its shipyard units in the second half of 2009 or early 2010.