The recent response from the Joe Biden administration to a petition from a group of five U.S. unions, requesting a review of China’s subsidies for shipbuilders, has sparked cautious optimism among Korean shipbuilders. This development signals a potential shift in the global market dynamics, with the shipbuilding sector emerging as the latest battleground in the ongoing strategic rivalry between the United States and China, according to industry officials.
Following the positive response from the Biden administration on March 12, Korean shipbuilding stocks experienced significant gains, despite a slight drop in the benchmark KOSPI index. This indicates investor confidence in the potential for Korean shipbuilders to capitalize on the changing dynamics in the global market.
The move to review China’s subsidies for shipbuilders reflects broader concerns about unfair trade practices and subsidies that may distort competition in the global shipbuilding industry. By addressing these issues, there is hope that Korean shipbuilders could see an increase in their overall market share, positioning them for greater success on the global stage.
However, while optimism is growing, industry officials remain cautious, recognizing that the situation is complex and subject to further developments. Nonetheless, the positive response from the Biden administration represents a significant opportunity for Korean shipbuilders to strengthen their position and competitiveness in the global market.
The recent response from the Joe Biden administration to a petition filed by a group of five U.S. unions, requesting a review of China’s subsidies for shipbuilders, has had a significant impact on the stock prices of Korean shipbuilding companies. In particular, Samsung Heavy Industries and Hanwha Ocean witnessed substantial increases in their stock prices during Thursday’s trading session, with Samsung Heavy Industries’ stock price soaring by 13 percent and Hanwha Ocean’s rising by 11 percent.
Additionally, the stock prices of HD Korea Shipbuilding & Offshore Engineering (KSOE) and its listed shipbuilding units, HD Hyundai Heavy Industries and Hyundai Mipo Dockyard, also experienced notable increases. Exchange-traded funds owning major Korean shipbuilding stocks were among the most profitable domestic funds last week, reflecting investor optimism surrounding the potential implications of the petition.
Analysts suggest that the U.S. government is likely to accept the request for an investigation into China’s shipbuilding subsidies, which could have long-term implications for the competitiveness of Chinese shipbuilders. This could lead to Korean shipbuilders gaining market share, particularly in sectors such as gas carriers, as the transportation of liquefied natural gas and liquefied petroleum gas to the U.S. continues to grow.
Furthermore, the U.S. government is expected to strengthen ties with Korean shipbuilders in the naval ship sector. Senior officials from HD Hyundai and Hanwha Group, including Vice Chairman Chung Ki-sun and Vice Chairman Kim Dong-kwan, are reportedly planning trips to the U.S. to discuss providing maintenance, repair, and overhaul services to the U.S. Navy, following discussions with U.S. Secretary of the Navy Carlos Del Toro during his visit to Korea.
