2012 New Year of domestic shipbuilding and marine and maritime industry

Beyond the limit, 2012 Shipbuilding and marine and maritime industries?
During the year 2011, the domestic shipbuilding and marine industry as a whole showed a smooth recovery. Domestic shipbuilding companies in October 2011 kept market share position as the undisputed global leader by awarding a total of 12.28 million CGT, while taking the world half the ship's orders.
One of the greatest features of the 2011 is that the demand for LNG is growing for oil price and the replacement demand for nuclear power,

Currently for LNG by 2030, in Asia-Pacific region, the demand of 3 million tonnes per year is expected and considered gradually expand the market, and the order of LNG vessels such as LNG carriers and LNG-FERU are increasing.
In addition, in terms of the general vessels, other than large crude carriers (VLCC) and bulk carrier in the area the past, the order of value-added vessels was followed and also, the orders of transport and maritime affairs showed a sharp increase.

On the other hand, in 2012, with the European financial crisis in the world market it is estimated to more increase the risk of decline for ship orders than in 2011, half of 2010.
And staring from 2013 when the order in preparation for the 2015 or more that the oversupply of the market is relieved, it begin the world tanker order and is expected to enter the '3 year cycle recovery, and a 3 year boom' for the cycle linked from 2003.

From this point, it’s because, followed by tankers and the orders, worldwide orders backlog is estimated to enter the increased sector.
From the supply-demand balance of the price level the price is rising and from accumulation of orders pricing power of shipbuilders occurs, and thus it is expected to continue to boom in 2016 when the oversupply of all types of ship is relieved.
However, in 2012, with the order decreases and continuous backlog reduction it is estimated for the ship price to fall somewhere even further.

I. The prospect of 2012 Shipbuilding and marine and maritime industry,
1. The direction of the shipbuilding industry in 2012?
In the period of the second half of 2010 and the first half of 2011, orders for large container vessels have been mainly done. However, due to financial crisis in Europe, with the sluggish performance of the ship company and financial downturn first half of 2012 is expected to decrease by a container ship orders, bulk and tankers are estimated to be last recession similar to in 2011 and eventually in 2012, all of ships such as container, tanker and bulk would seem to be recession.

Figure 1. New orders quantity ClarkSea Index and ship type outlook
■ Source: Clarkson, NH Investment & Securities

Figure2. Container freight rates and bottom order orderbook trend compared to
■ Source: Clarkson, Solomon Investment Securities

(1) View for the main vessels
1) The first half of 2012, outlook for container ship orders?

Figure3. Cargo volume contrast ship's space rate order outlook
■ Source: Clarkson

2) The first half of 2012, prospects for bulk order?

Figure 4. Trend BDI and Ship's space
■ Source: Clarkson

Figure 5. Orders changes and Ship's space rates (Unite: Million DWT) ■ Source: Clarkson

3) The first half of 2012, tanker orders outlook?
Figure6. Oversupply rate and fare trend
■ Source: Clarkson

Figure 7. Oversupply rate and Quantity orders trend
■ Source: Clarkson

4) The first half of 2012, LNG ordering outlook? Figure 8. The LNG long-term contracts pure growth and LNG carriers ordered a new trend
■ Source: Bloomberg(2011.09), Kiwoom Securities
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2. The direction of the marine industry in 2012?
Oil prices are still maintaining a high level and therefore, long-term order outlook is still bright. However, in the first half of 2011 with a surge of the orders for drill ship and LNG line, orders in first half of 2012 is likely to weaken somewhat.

(1) In 2012, expected order of marine plant?
Figure 9. The oil production of the existing mine concession and demand outlook
■ Source: Petrobras

Figure 10. Content deep sea facility investment prospect
■ Source: Douglas-Westwood

Figure 11. Offshore sales in 2001, more than two-fold larger
■ Source: Ship company, KTB Investment Securities (Note: Hyundai Heavy Industries and Daewoo Shipbuilding and Marine Engineering 2 companies per calculated)

Figure 12. Backlogs ocean gravity exceeds 50%
■ Source: Ship company, KTB Investment Securities

Table1. Expected in 2012 Ordering major marine plant project
■ Source: Various media reports

(2) In 2012, expected orders of offshore wind power?

II. Summary
Global ship finance scale based in balance at end of 2010, according to Marine Money reaches 382 billion dollars in which 319.4 billion dollars, 83.6% among these, was achieved by European bank such as HSH Nordbank, RBS, Credit Agricole CIB, DnB NOR Bank.
Except for such that Scandinavia bank of DNB NOR and NordeaDeviated a little bit from the risk due to the recent financial crises of european countries, it even reaches 2,610 billion dollars, 68.3%. Recently, Asian banks such as China and Japan has a growing proportion but because the positions of European banks are very absolute, P Ⅱ GS countries' financial crisis are shaking the global ship financing market as a whole.l

Syndicated Loan scale on the third quarter of 2011 is actually $ 11.8 billion, decreased 43.8% compared to the previous quarter, and this rapid reduction is max. following 61.9%, the fourth quarter of 2008, and 52.0%, the second quarter of 2009.
Accordingly, Syndicated Loan scale of the third quarter of 2011 plunged to a level of the fourth quarter of 2008(11.2 billion dollars) and recovery of the ship finance market is considered to be possible in the second half of 2012.
Basically it is expected to need a considerable amount of time in European banks' assets depreciation and capital increase, and although this process is proceeding smoothly, to resume ship financing immediately after capital increase could be difficult. Thus the outlook in 2012 is not bright.

■ References
. Energyfiles
.RS Platou
.Ministry of Knowledge Economy, Republic of Korea
.KMI, World Shipping Market Outlook 2012
.Busan Marine Equipment Association
.Hana Financial Management Institute
.Institute for International Economics
.Hanwha Securities Research Center
.NH Investment & Securities
.Solomon Investment Securities
.Kiwoom Securities
.KTB Investment Securities
.Marine and Shipbuilding Monthly Apr, Sep, Oct-2011

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