Brussels, 30/04/2002 (Agence Europe) - The European Commission has finally decided to proceed with examination of the fifth report on shipbuilding on the world before turning to the "revised " strategy in the fight against unfair practices in South Korean shipyards which seems to be leading to serious differences of views within the Commission (see EUROPE of 26 April, p.15). The report, that it adopted on Tuesday, notes that the world shipbuilding market continues to face serious difficulties, while certain South Korean yards are still pricing ships below cost, and that world ship prices are still being depressed by excess supply due to past expansion of yards mainly in Korea, but now, increasingly in China. Thanks to the record number of new orders in 2000, prices recovered briefly, but the substantial fall in orders in 2001 has led to a substantial fall in prices, in the wake of the American recession and the 11 September attacks that affected sea trade and cruises. Declining orders for container ships and cruise ships cut the market shares of both Korea and the EU, particularly strong in these segments.
The fifth report confirms the imbalance between supply and demand, which lies at the root of the very low prices being proposed, especially by Korea in most market segments. In certain cases, the resulting losses were compensated by financial restructuring which, says the Commission, does not comply with WTO rules. The only increase in absolute order volume last year was in the (niche) market for liquified natural gas carriers (LNG). Korean shipyards took 79% of the new LNG carrier orders in 2001, even though they have no patents on requisite key technologies. Market analysis suggests they gained their LNG market share (now 65% of the world order book), through low offer prices and their ability to supply large numbers of vessels at an early delivery date. This market segment which was previously dominated by Japanese and European shipyards (mainly French and Finnish) has now moved to Korean control. An element that provides Commissioner Lamy with arguments who nobody claims to want to see included gas carriers in the field of application of the revised version of the proposal establishing a device aimed at protecting European shipyards from Korean dumping (see aforementioned EUROPE).
The fifth report may be consulted at the following address: http: //europa.eu.int/comm/enterprise.maritime/shipbuilding_market/index.htm