Hwang & Co > ::: HWANG & COMPANY ::: Shipbrokers in Korea > Korea Report

With SKorea seeking to thaw frozen ties with NK by holding talks before the opening of the PyeongChang Winter Olympics , concern is rising over whether the diplomatic overture would hamper the allies' efforts to present a united front against NK's nuclear program. Two Koreas reopened a border hotline in order to restore a channel for direct communication after years of cross-border tensions, while US President Donald Trump traded barbs with NK's leader Kim Jong-un over his threat to use a "nuclear button." Seoul and Washington reiterated they are in close contact and vowed to resist any attempts by the North to drive a wedge between the allies. However, Seoul's push for talks may sow dissent in the allies' approach in dealing with NK.

SKorea is eager to figure out how to best leverage the PyeongChang Winter Olympics as an opportunity to bring peace and stability to the Korean Peninsula. One of those ideas is to show the world the two Koreas' delegates marching together in the opening and closing ceremonies of the Olympics. However, an unlikely debate has emerged among the people of SKorea. The Moon administration said the delegates should raise a "Korean Unification" flag, white flag with blue shape of the Korean Peninsula in the center. But there are criticisms that such precedent should not be applied to the PyeongChang Olympics, which SKorea earned the right to host in 2011 following two unsuccessful bids. There is no precedent where the host country has not raised its own national flag during the opening and closing ceremonies. Sports Minister Do said two Koreas marched together under the Korean Unification flag, in 2002 Asian Games held in Busan, where NK sent a massive group of delegates, including a large cheerleading squad, and a year later, the Summer Universiade in Daegu.

Korean government said on 23rd that it will lodge a complaint with the WTO about US President Trump's decision to slap tariffs on imported washing machines and solar panels produced by Korean manufacturers, expressing confidence the excessive sanctions will prove invalid. Trade Minister Kim Hyun-chong cited US safeguards on Korean steel in 2002, anti-dumping duties on washing machines in 2013 and anti-dumping duties on steel pipe in 2014. As its first move, the government is slated to file a request for consultations to the WTO.

With the government driven minimum wage for this year raised 16.4% to KW7,530 ($7.06) per hour, part-time and contract jobs have been hit hardest, while prices of products closely related to the livelihoods of ordinary people are rising. A job website's survey of 1,458 adults looking for part-time employment found that 72% of them expected more difficulties in finding jobs or worried about being fired in the wake of the rise in the hourly minimum wage. The government had looked forward to seeing a virtuous cycle in which raising the minimum wage would increase household income, followed by an increase in consumption and then in production and employment. But in reality, the wage hike has affected disadvantaged groups in the labor market the most.

Exiting from the worst phase of order drought in 2017, Korean shipbuilding industry is planning to accelerate the pace of recovery with more orders. Last year, Korean industry led global merchant vessel market especially in tanker, containership, and LNG segments, as well as bagging a few significant large deals in the offshore market. The industry netted deals worth over $21.2 bil. This year, the industry is aiming for a much higher target, around $29.8 bil plus undisclosed extra. HHI Group has set its 2018 goal as $13.2 bil for shipbuilding, $1.6 bil for offshore (HSHI $3.4 bil, HMD $3 bil), showing off great confidence in the market recovery. The target is much higher than last year's $7.5 bil target and the final result, $10 bil in shipbuilding segment. The company is also aiming to make a comeback in offshore business, in which it had secured no new order last year. SHI, which exceeded last year's target $6.5 bil with $6.9 bil with 28 units, was understood to have set a $7.7 bil goal, but have raised the goal to even higher $8.2 bil. It will seek any opportunity in both merchant vessel and offshore business. DSME netted $2.96 bil with 25 units last year and is planning to win over $5 bil this year. STX O&S is planning to achieve around 212% of the last year's result in 2018 with $734 mil, 20 units. It will focus on LNG bunkering vessels, MR product carriers, and small and mid-sized gas carriers. Sungdong, while they have an internal target and business plan, cannot be disclosed as due diligence is in progress. The construction of five 115K tankers for Kyklades is understood to be delayed due to the request from the orderer. Daehan Shipbuilding won 14 units last year at around $530 mil. The company raised target at 16 units, $700 mil this year, focusing on aframax tanker market. Daesun have won 14 units at around $260 mil last year and raised target at 13 units at around $320 mil. It is aiming for small and mid-sized containerships and tankers. Yeongdo yard of Hanjin HIC is now going all out for special purpose vessels, or military ships, concealing its target or business plan. Its Subic yard did not disclose target either.

The Marine Finance Center (MFC) of Korea will set up and implement a new guideline, which allows low price orders partly with 'orders below production costs', temporarily by the end of this year. Shipyards of the country have been excluded from the RG issue if they fail to meet the guideline. Amid low price order spree from Chinese and Singaporean yards, however, the guideline has made the Korean yards more difficult to win new orders. Under a new guideline, low price orders are allowed partly in Korea when large-sized shipyards win newbuildings jointly or shipyards score vessels from their compatriot shipowners. Also, an optimum order criteria is eased when they win their major ship types such as LNG carriers, FSRUs, ULCs, shuttle tankers, VLCC. Shipyards which have 10-15 months of order cover are capable of winning newbuildings at prices 2-3% lower than productions costs. As for those which have less than 10 months of order cover, their contract prices are allowed to be lower up to 6% than production costs.

Two Koreas agreed on the joint participation in the PyeongChang Winter Olympics (p.2)

Korea to lodge complaint with WTO on Trump’s protectionism on washing machines etc (p.2)

The government driven minimum wage for this year raised 16.4% to KW7,530 per hour (p.4)

SKorea’s military will reduce its number of troops to half a million by 2022 (p.8)

Rise in KWon, interest rates and oil prices are casting shadow on Korean economy (p.9)

Korean electronics industry recorded $121.7 bil in production volume in 2017 (p.12)

Samsung ranked fifth on the list of world's most innovative companies in 2018 (p.14)

SEC decided on its first-ever stock split of the face value of its stocks to 50:1 (p.14)

HMC and Kia Motors posted record-high 995,383 units of newly registered vehicles in Europe (p.16)

HMC unveiled a next-generation hydrogen-powered sport utility vehicle, Nexo (p.16)

Korean authorities are to implement a new softened guideline for issuing RG (p.19)

-------------------------------------------------------------------------------------------------------