Brussels, 13/11/2002 (Agence Europe) - As the general and substantial fall in orders for new vessels shows during the first six months of the year, serious difficulties in world shipbuilding are increasing, the Commission notes in its sixth report on the situation of the world shipbuilding market, adopted on 13 November. It thus notes that, due to past over-supply, slowing economies around the world and the effects of 11 September, orders have fallen significantly, shipyards are running out of work and a number of bankruptcies and lay-offs have already occurred, mainly in Europe. In this shrinking market, European shipyards are also threatened by unfair pricing by certain competitors, mainly South Korea.
According to the report in the first half of 2002, world orders for new vessels fell by almost two thirds, compared to average quarterly figures in 2000. In the EU, orders are down by almost four fifths compared to 2000. The sectors for container ships and cruise ships are the most affected, but demand is also lower for crude oil tankers and LNG carriers. Demand has remained comparatively stable only in the product tanker segment, due to replacement needs stemming from new EU maritime safety legislation, and in the bulk carrier segment, in which EU yards are not longer active.
Furthermore, the report shows that prices of new ships have declined further and are now at the lowest level for more than a decade. South Korean yards have further lowered offer prices despite increases in all major cost factors and the appreciation of the Korean currency, in order to trigger fresh demand. A number of Korean yards may find it difficult to meet their financial obligations if orders do not pick up soon, the Commission states. Detailed cost investigations for orders placed with South Korean yards confirm the findings from previous reports, namely that ships are offered at prices which do not cover the full cost of production. Studies show that the gap between the offer prices and calculated normal price is again widening. This confirms justification for the EU's investigation procedure against Seoul within the context of the WTO (the request for bilateral consultation with South Korea was introduced on 21 October and a first consultation meeting will be held before the end of the month). The Commission will continue its market and cost observation and present a new report to the Council in 2003. The report, which will cover the whole of 2002, should make it possible to determine whether the situation in the tanker sector makes them eligible for EU aid to allow European shipyards to face up to the unfair trade practices of South Korea. On this point, the report adopted on Wednesday does not introduce any new elements.