Shipbuilding Industry In South Korea: Adapting Amid China’s Surge

Economic

Summary:

The shipbuilding industry in South Korea has long been a global powerhouse, recognised for its technological expertise and high-value production.

However, recent data shows a shift in the global market landscape, with China gaining momentum. Despite a dip in its overall market share, South Korea remains a leader in key sectors like LNG (liquefied natural gas) and LPG (liquefied petroleum gas) carriers, a cornerstone of the industry’s future.

South Korea and China lead the industry

In recent years, the global shipbuilding industry has been dominated by Asian players, mainly South Korea and China. According to a report by UK-based Clarkson Research, China accounted for approximately 71% of global shipbuilding orders based on Compensated Gross Tonnage (CGT) in 2024, marking a significant surge. In contrast, South Korea’s market share dropped to 17%, widening the gap between the two nations from 40 percentage points in 2023 to 54 percentage points in 2024. Despite an increase in total orders, it is South Korea’s lowest level in eight years. Europe accounts for 6% and Japan for 4% of the global order book, according to Clarkson’s data.

China’s dominance stems from its ability to produce high-volume at lower cost. According to a study by ING Think, labour costs in China are about 50% less compared to Korea and Japan. In total, labour costs comprise more than 20% of production costs. Moreover, China is also the world’s cheapest steel manufacturer, making for competitive prices on that end.

South Korea to focus on smart, clean shipbuilding tech

While South Korea’s overall market share has declined, it leads in efficiency, having the highest ratio of shipbuilding per yard, and value. “Most of the orders received by Korean shipbuilders are for high-value vessels such as LNG carriers, LPG carriers, and VLCCs, and they come from reliable shipowners,” says ING’s Min Joo Kang, Senior Economist, South Korea and Japan.

Korean shipbuilders hold a dominant 93% share of the LPG carrier market. China, on the other hand, has experienced the strongest growth in exports of motor container ships over the last two years. “This is a segment that is not the primary focus of Korean and Japanese shipbuilders,” says Kang.

South Korea’s focus on eco-friendly technology and adherence to International Maritime Organization (IMO) regulations positions it as a leader in sustainable shipbuilding. Companies like Hyundai Heavy Industries and Samsung Heavy Industries are at the forefront of innovation, developing advanced LNG and dual-fuel carriers to meet growing global demand.

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The government is also supporting the shipbuilding industry by investing $1.44 bn over the next 10 years to collaborate with businesses in developing smart and clean energy technologies. In addition, international collaborations, for example with Norway to develop eco-friendly and smart vessels, strengthen the ambitions further.

Rising players in Asia’s shipbuilding industry

While China, South Korea and Japan currently account for more than 90% of the global shipbuilding industry, other Asian nations like Vietnam, the Philippines, and India are emerging as potential players with significant growth opportunities, the ING study highlights. However, barriers to entry remain high, as shipbuilding demands substantial capital, skilled labour, and often government support to compete with the established leaders.

Over the past decade, Vietnam’s shipbuilding industry has grown tenfold and is projected to maintain a compound annual growth rate (CAGR) of 6% from 2023 to 2032. The country is actively pursuing international cooperations, such as the joint shipyard between Hyundai Mipo and Vietnam’s Shipbuilding Industry Corporation (SBIC), which has grown into Southeast Asia’s largest shipyard.

India aims to become a top 10 shipbuilding nation by 2030. The government has launched key initiatives, such as the Financial Assistance Policy and infrastructure grants, to attract investment and reduce dependence on foreign shipping lines.

Looking ahead, Asia is in a good position to further lead the shipbuilding industry. ING names three factors: 1) The region’s central role in global trade, driven by rising intra-Asia trade flows, 2) Affordable yet skilled labour across emerging markets like Vietnam and the Philippines and 3) Government-backed strategies to support shipbuilding growth in countries such as India.

“The current upcycle in shipbuilding is poised to offer numerous opportunities for both emerging and established players,” says Kang. “Despite its cyclical nature, which inevitably brings future downturns, shipbuilders have demonstrated resilience and adaptability in managing past challenges. It is evident that shipbuilding will continue to be a significant growth driver in Asia.”

Source:asia fund managers

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Justin

Economic

The core inflation rate, which excludes private road transport and accommodation costs, was above the 1.7% forecast by a Reuters poll of economists and the 1.9% seen in November.

Headline inflation was 1.6% in annual terms in December, higher than economists' forecast of 1.5%.

Inflation has declined from a peak of 5.5% in early 2023 and December's rise is the smallest since November 2021, when it rose by 1.6%.

Lower inflation and higher growth have created room for the Monetary Authority of Singapore to ease monetary policy at its scheduled review on Friday, though analysts are split on whether the central bank would wait to assess the impact of US President Donald Trump's policies.

Singapore's economy did better than expected in 2024 with 4% growth in advance estimates, after slowing to 1.1% in 2023 from 3.8% in 2022.

The MAS has not changed policy since a tightening in October 2022, which was the fifth in a row, as broader concerns about growth kept authorities sidelined.

It last eased policy in March 2020 as Singapore braced for a recession with Covid-19 spreading worldwide.

The trade ministry is expecting growth of 1.0% to 3.0% in 2025.

Source：theedgemalaysia

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Cohen

Economic

Anwar, who is also the finance minister, said the agreement was reached through a meeting with the company’s leadership team led by Fortescue executive chairman and founder Andrew Forrest AO on the sidelines of the World Economic Forum (WEF) Annual Summit 2025 here.

“The Sarawak government has agreed in principle, and I have guaranteed several incentives and support, so that Bintulu will become a hub,” he said at the closing press conference in conjunction with his working visit to the WEF 2025.

On Tuesday, Anwar led a Malaysian delegation to attend face-to-face business meetings organised by the Ministry of Investment, Trade and Industry with corporate leaders representing Fortescue, AstraZeneca, DP World, Medtronics, Nestlé and Google.

Commenting further, the prime minister explained that through meetings with companies investing in Malaysia, the large port company from Dubai, DP World, which comes into Sepanggar, Sabah, had received the support of the federal government.

“As for Sabah, which will have a relatively large port in the region when Dubai Ports comes in, the federal government has informed Chief Minister Datuk Seri Hajiji Noor and the Sabah government to provide full support and cooperation,” he added.

In addition, the prime minister said Google would continue implementing major programmes, such as the one established in Selangor, namely data centres that would benefit Peninsular Malaysia, particularly Johor, Penang and Perak.

Furthermore, he said that issues related to artificial intelligence, including in the fields of medicine and education, were also discussed in the meetings with global companies.

Anwar attended the WEF 2025 from Monday to Wednesday, for the first time as Malaysia's prime minister since taking office in 2022, at the invitation of WEF founder and chairman of the board of trustees Klaus Schwab.

Throughout the three-day visit, Anwar was accompanied by Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz, Higher Education Minister Datuk Seri Dr Zambry Abdul Kadir, and Digital Minister Gobind Singh Deo.

Source：theedgemalaysia

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Justin

Commodity

Citing trading sources, Bloomberg reported that the effect of the sanctions in crude oil prices in Asia has been so pronounced that in some cases it has pushed refining margins below zero. Most of the refiners affected by the ripple effect of the sanctions were in South Korea, Singapore, and Taiwan, the report noted, and normally buy Saudi crude, which is priced against benchmarks such as Oman, which is currently soaring amid the replacement rush.

In the latest sanction package, reported to be the harshest yet, the Treasury of the outgoing Biden administration imposed sanctions on Gazprom Neft and Surgutneftegaz, as well as on 183 tankers, many of them in the so-called shadow fleet Russia uses to ship its oil abroad without having to use Western vessels or insurance.

“The new Russian sanctions from the outgoing administration are a net addition to at-risk supply, adding more uncertainty to the (first quarter) outlook,” RBC Capital Markets said in a note at the time. Other forecasters warned of a further supply tightening in an already tight market, mostly because of the tanker sanctions. Following the release of the package, oil prices rose to highs not seen in months.

The sanctions will be most painful for India, analysts warned, as the country depends on imports for over 80% of its oil consumption and was the biggest beneficiary of affordable Russian crude, a lot of which has now become unavailable. According to Kpler, 75 of the sanctioned tankers were used to transport crude oil from Russia to India.

“Most of these barrels went to Indian refiners and, hence, the impact will likely be largest there,” BNP Paribas senior commodity strategist Aldo Spanier told CNBC earlier this month.

Source：OilPrice

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Justin

Economic

The final figures for home sales last year are in, and the story is quite grim: 2024 was the slowest year for existing home sales in nearly three decades.

Existing-home sales last year totaled 4.06 million, the lowest on an annual basis since 1995, according to the National Association of Realtors on Friday.

A big factor behind the slowdown was elevated mortgage rates, which spent most of the year above 6.5%.

Although rates hit a low of 6.08% in late September — just after the Federal Reserve cut interest rates for the first time since 2020 — they've climbed again lately. Last week. the average rate on a 30-year mortgage passed the 7% mark, before dropping slightly this week to 6.96%.

Experts say rates of 6-7% are the new normal.

"Economic and monetary policy uncertainty and inflationary concerns will likely keep mortgage rates elevated for the near future," said Mortgage Bankers Association President and CEO Bob Broeksmit in a statement.

But there are some signs of loosening: existing home sales in December were 9.3% higher than a year earlier.

"Home sales in the final months of the year showed solid recovery despite elevated mortgage rates," said NAR Chief Economist Lawrence Yun in a statement. "Home sales during the winter are typically softer than the spring and summer, but momentum is rising with sales climbing year-over-year for three straight months ... Job and wage gains, along with increased inventory, are positively impacting the market."

A tough sell to give up low rates

It's not just that mortgage rates are high — it's that so many current homeowners locked in rates below 4% just a few years ago when the U.S. was enjoying low interest rates.

Danushka Nanayakkara, assistant vice president for forecasting at the National Association of Homebuilders, says many would-be buyers and sellers "have locked into those historic low mortgage rates in 2021, 2022."

"And I think right now the fact that the mortgage rates are hovering close to 7%, it's very difficult to convince this group of people to let them go, and become move-up buyers," she says.

Traditionally, she says, people buy a starter home and then after about seven or eight years, they move on to a pricier home.

But letting go of a very low mortgage rate is a tough sell, and high home prices don't make it any easier — meaning there haven't been many options to choose from for home-shoppers.

"Taken all together, the cost of borrowing, the fact that the mortgage rates are really high, high home prices and the low levels of inventory — I think these are all factors that played a role in existing home sales slowing down last year," says Nanayakkara.

More supply is arriving

At least there's some good news in terms of supply.

Last year was a good one for the completion of more housing: An estimated 1.63 million housing units were completed in 2024, according to Census data, or 12.4% above the 2023 figure.

As existing home sales have slowed, sales of new homes have become a larger part of the market — about 30%, says Nanayakkara. There's now significantly more inventory of new homes for sale than there is of existing homes for sale.

Despite the slow year for existing home sales, there's still great demand for housing, especially affordable housing. But home builders are facing challenges: high borrowing costs, a tight labor market, and rising material prices.

"This makes it difficult for the builders to meet that growing need for housing," says Nanayakkara. "At the same time, there's a lot of desire for more affordable, flexible housing solutions, such as townhome developments, multifamily projects, built-for-rent models. It's this delicate balancing act."

Source:Laurel Wamsley

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Owen Li

Economic

The Japanese yen gained strength as speculation grew regarding a potential interest rate hike by the Bank of Japan (BoJ), driven by hawkish commentary from BoJ officials, which increased the likelihood of this action.

Key factors driving yen strength

A possible rate hike would raise Japan’s short-term borrowing costs to 0.5%, the highest level since the 2008 global financial crisis. This decision would align with recent optimism about the economy’s ability to achieve sustainable inflation. Markets also expect the BoJ to revise its core inflation forecast upwards, with confidence growing that wage increases will help maintain the 2% inflation target.

Additionally, Japan’s Finance Minister Katsunobu Kato reiterated the government’s readiness to take measures to support the yen, adding further strength to the currency.

In the broader market context, investors are also evaluating the actions of US President Donald Trump on his first day in office, which included signing several executive orders and discussing plans for trade tariffs. These developments contribute to broader uncertainty, indirectly favouring the yen as a safe-haven currency.

Technical analysis of USD/JPY

On the H4 chart, USD/JPY experienced a pullback from the 156.56 level and is extending its downward wave towards 154.20. After reaching this level, a growth wave back to 156.56 is possible. This scenario is supported by the MACD indicator, with its signal line below zero and pointing downwards. Japanese Yen Strengthens to a Monthly High as Markets Anticipate a Bank of Japan Rate Hike_1

Japanese Yen Strengthens to a Monthly High as Markets Anticipate a Bank of Japan Rate Hike_1

On the H1 chart, the pair is consolidating near 155.40, with expectations of a downward breakout to 154.20. After hitting this target, a corrective wave to 156.56 (a test from below) is possible. Further development of the downward wave could push the pair to 154.00. The Stochastic oscillator confirms this scenario, with its signal line below 50 and trending sharply downwards. Japanese Yen Strengthens to a Monthly High as Markets Anticipate a Bank of Japan Rate Hike_2

Japanese Yen Strengthens to a Monthly High as Markets Anticipate a Bank of Japan Rate Hike_2

Conclusion

The strength of the Japanese yen reflects the growing expectations of a BoJ rate hike and supportive government policy. While technical analysis points to a further downside potential for USD/JPY in the short term, the pair’s movement will hinge on the BoJ’s upcoming decisions and broader market dynamics. On the downside, key levels to watch are 154.20 and 154.00, with 156.56 acting as a potential corrective target.

Source：actionforex

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ING

Economic

Some positive news from the eurozone at last. It’s not much, but a small increase in the PMI to bring the level above 50 is at least something. The manufacturing sector saw an increase in its output index from 44.3 to 46.8, which still signals contraction but less so than before. The services sector continues to be the engine for growth, although the business activity PMI dropped slightly from 51.6 to 51.4. So overall, a roughly stagnant economy seems to persist for the moment.

Growth continues to be hampered by weak international demand. Export orders continue to decline for the moment and with US tariffs once again looming over the eurozone manufacturing sector, the outlook remains bleak. Interestingly though, optimism for manufacturers did increase in January, which shows that businesses are counting on improving growth over the course of the year. We think that’s fair to expect, but modestly and mainly driven by stronger domestic demand.

The European Central Bank (ECB) meets next week and another rate cut of 0.25ppt is widely expected, with more to come. The ECB itself seems okay with that view as we heard in Davos this week. Still, inflationary pressures are moderately increasing again and businesses indicate that they are pricing those higher costs through to the consumer according to the PMI. While the biggest inflation risks have abated, this shows that upside inflation risks are not yet a thing of the past.

Source: ING

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