South Korean shipbuilders are expected to face challenges in securing new vessel orders in 2020 and further out, as a prolonged coronavirus pandemic could result in a global orders drought, the Ministry of Trade, Industry and Energy said Monday.

Over January to March 2020, global orders for new vessels sank 70% year on year to 2.39 million CGT (compensated gross tons), of which 400,000 CGT was secured by South Korean shipbuilders.

The Q1 tally marks a sharp dive from the 1.62 million CGT secured by the domestic shipbuilders last year over the same period, data from Clarksons Research Institute showed.

The ministry said it will help local shipbuilders over growing market concerns that new orders around the globe will fall down the road amid the pandemic and a fall in oil prices. For the first time ever, NYMEX May WTI settled at minus $37.63/b on April 20 on oversupply and weak demand.

It said the fall in oil prices has led to postponement of energy projects, such as the $30 billion Rovuma LNG project in Mozambique, whose final investment decision (due in H1 2020) was delayed by ExxonMobil. As a result, new orders for LNG vessels for the project will be delayed too.

The additional vessels required by 2024 to transport LNG will fall to 160 from 270 earlier, according to a report from Drewry Maritime Research.

To help domestic shipbuilders and other sectors, South Korean President Moon Jae-in, on April 22, said the country will set up a Won 40 trillion ($32.5 billion) key-industry stabilization fund to protect mainstay industries.

Shipbuilding activity in China was also heard to have been hit hard by the quarantine period during Q1, the source said.

As shipbuilding orders plunge, demand for steel plates and shapes are subsequently expected to weigh in on steelmakers alike. 

-- Clement Choo, Samuel Chin