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STX Shipbuilding wins RG in seven weeks from latest newbuilding deal
Friday, June 16, 2017, 16:00:12 Paul Yoon
STX Shipbuilding (STX Offshore & Shipbuilding) announced on June 15 that it has lately received an RG (refund guarantee) from KDB (Korea Development Bank) for the newbuilding order booked for four 11,000dwt tankers last April.

Helped by the RG, STX Shipbuilding has raised hopes for its management normalization, receiving the first newbuilding order in 17 months so that it can put sustained shipbuildings on the right track.

Though small-medium sized (SM) shipbuilders in Korea have struggled in absence of RG issued by banks, STX Shipbuilding is considered to have successfully won the RG thanks to the faithful execution of its rehabilitation plan (RP) since the court’s earlier receivership filed, and to the high credits given to the disposal of STX France and of its employee apartment under its financial restructure.

STX Shipbuilding had 14 vessels booked on its backlog as of June last year after delivery of 24 new-built ships with 18 ships cancelled out of 56 ships prior to the court’s approval for its RP, but its backlog orders have grown to a total of 18 ships under the RG issued this time.

Nevertheless, those vessels bagged into this year take seven months for ship designing and material procurement. This means only part of its works is secured for the second half of this year. So, the shipyard still has to cope with some financial setback including employees’ leave in turn until next year in order to comply with the fixed cost guide line under its RP.

Meanwhile the shipyard predicts, citing: “Now that SM shipbuilders have different markets from those of major shipbuilders, SM shipyards’ sentiment of market recovery is slowly rising. Once the government’s financial support is provided to SM Korean shipbuilders, foreign shipowners will preferably seek SM Korean shipbuilders who build better quality ships for higher secondhand value in future operation. This will provide good chance for Korean shipbuilders to regain the world’s first ranking.”

According to UK-based Clarkson’s Shipping and Shipbuilding Research Intelligence, China has only 169 shipyards now in reduced operation out of 679 shipbuilders representing 75% of its total capacity with a 30% global market share, attributed to the last year’s order drought. This Chinese situation feeds above-said sentiment.

A STX official said: “Unlike last year’s order drought, we are facing the reversed market recovery sentiment, continuously receiving more shipbuilding inquiries with a focus on medium-size tankers and small gas carriers, and are expected to receive extra orders soon. If extra financial support coming to us including RG issues, we can make one more step closer to our management normalization.”
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