Brussels, 03/05/2000 (Agence Europe) - With its adoption on Wednesday of its second report to the Council on the state of the world shipbuilding market, the European Commission observed that the world market for merchant ships is continuing its state of crisis. Supply far outstrips demand and no improvement is likely. The decline in prices is continuing, in particular owing to extremely low prices from Korean shipyards. Studies on the cost of orders reveal once again the extent of losses (11 to 32% of building costs) which Korean yards are prepared to accept in order to increase market share and cash flow. These losses have decreased slightly from the Commission's first report (see EUROPE of 10 November 1999, page 9), but this is probably due to the choice of orders studied. At today's prices, EU and Japanese market shares continue to shrink, although this effect is less pronounced for the EU. With the exception of cruise vessels, Korean shipyards have targeted all market segments, leaving only small domestic orders and highly specialised tonnage to EU yards.
The report also highlights the Commission's efforts to convince the South Korean government to take part in the establishment of fair competitive market conditions, as requested by last November's Industry Council. These efforts resulted, on 10 April 2000, in the signature of "Agreed Minutes" by the Commission and the South Korean government. EUROPE would point out that this agreement concerns non-subsidisation, banking, financial transparency, commercial pricing practices and an effective consultation mechanism. In parallel, the European shipbuilding sector has compiled further evidence that could lead to a complaint before the WTO.
The Commission recommends that the Council:
This report will be submitted to the next Industry Council, meeting on 18 May.