The domestic shipbuilding industry has officially entered a "supercycle," characterized by high demand and strong performance.

Notably, the "Big Three" shipbuilders in South Korea—HD Korea Shipbuilding & Offshore Engineering, Hanwha Ocean, and Samsung Heavy Industries—are raising expectations of achieving a collective profit for the first time in 13 years. This trend of profitability improvement is anticipated to continue this year.

According to industry sources on January 7, South Korea's "Big Three" shipbuilders are expected to post a collective profit for the first time in 13 years, based on annual performance for last year. This marks their first joint profitability since 2011.

Financial data provider FnGuide projects the combined revenue of HD Korea Shipbuilding & Offshore Engineering, Hanwha Ocean, and Samsung Heavy Industries for 2023 to reach 45.64 trillion KRW. This represents a 24.3% increase compared to the previous year's 36.71 trillion KRW.

Operating profits also saw significant growth during the same period. HD Korea Shipbuilding & Offshore Engineering is projected to record an operating profit of 1.42 trillion KRW for 2023, more than quadrupling its 2022 figure of 282.3 billion KRW. Hanwha Ocean and Samsung Heavy Industries are also estimated to achieve annual operating profits of 156.7 billion KRW and 474.7 billion KRW, respectively.

An industry insider stated, "Revenue and operating profits have significantly increased as shipbuilders have begun delivering selectively secured orders."

The upward trend in the performance of South Korea's shipbuilding industry is expected to continue this year. As the delivery of low-cost ships ordered before 2020 is completed, the industry is entering a period where the benefits of selective order-taking are being maximized.

HD Korea Shipbuilding & Offshore Engineering secured $20.56 billion (approximately 30.24 trillion KRW) in orders last year, achieving 152.2% of its annual target of $13.5 billion. Samsung Heavy Industries recorded $7.3 billion (approximately 10.74 trillion KRW) in orders, reaching 75% of its $9.7 billion target. Hanwha Ocean also achieved an order intake of $8.86 billion (approximately 13 trillion KRW).

HJ Shipbuilding & Construction achieved its highest-ever annual order volume last year. The company secured orders worth 1.75 trillion KRW in its shipbuilding division, marking a 150% increase compared to 2022 and a 300% increase compared to 2023.

In addition, expectations for additional orders from countries such as the United States and India are growing this year.

 U.S. President-elect Donald Trump has mentioned the possibility of a shipbuilding alliance with ally South Korea.

Amid these developments, Hanwha Ocean and HD Hyundai Heavy Industries are making their presence felt in the U.S. naval vessel maintenance, repair, and overhaul (MRO) market, where orders are expected to increase to around 10 ships this year.

Hanwha Ocean became the first in South Korea to secure an MRO (Maintenance, Repair, and Overhaul) contract for U.S. Navy ships last year. The company won consecutive contracts for the MRO of two vessels, the USS Willi Shear and the USS Yukon, boosting expectations for additional orders in the future.

HD Hyundai Heavy Industries, a rival in the specialized ship sector, is also gearing up to enter the MRO (Maintenance, Repair, and Overhaul) business in earnest starting this year. According to market research firm Mordor Intelligence, the global naval vessel MRO market is valued at approximately 85 trillion KRW, with the U.S. alone accounting for nearly 22 trillion KRW.

Both Hanwha Ocean and HD Hyundai Heavy Industries completed preparations to enter the U.S. MRO market by signing a Master Ship Repair Agreement (MSRA) with the U.S. Navy Supply Systems Command in July last year.

Additionally, key officials from the Indian government visited the facilities of South Korea's Big Three shipbuilders to discuss potential shipbuilding cooperation between the two countries. Recently, the Indian government announced its ambition to become one of the world's top five shipbuilding nations by 2047. As part of this goal, India plans to establish shipbuilding and maintenance clusters locally. The country aims to expand its fleet from the current 1,500 vessels to approximately 2,500 in the coming years.

An industry insider stated, "The shipbuilding industry's large supercycle should have transitioned from an upturn to a downturn by now, but the prolonged Russia-Ukraine conflict has solidified energy trade flows, allowing shipbuilders to maintain an advantage in negotiations." They added, "In particular, South Korea's major shipbuilders have already secured 3 to 4 years' worth of orders, and with the strong dollar trend expected to persist, their performance is likely to continue its upward trajectory."

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