South Korea’s Smaller Shipbuilders Run Full Docks as Orders Surge

A view of HJ Heavy Industries’ Yeongdo shipyard in Busan. [Photo provided by HJ Heavy Industries]

South Korea’s shipbuilding boom is spreading beyond the biggest yards to smaller builders, with docks effectively running at full capacity as a wave of orders secures years of work. Industry officials say selective order-taking and efficiency drives are also setting up what could be record results this year.

As of last year, shipyard utilization at midtier builders such as HJ Heavy Industries, Daehan Shipbuilding and K Shipbuilding exceeded 100%, according to industry data released Monday.

Utilization above 100% indicates expanded working hours through holiday shifts and night operations, reflecting steadier workloads from recent contract wins.

HJ Heavy Industries, which builds both naval and commercial vessels, has been building a stable order backlog. With continued wins in naval work, including U.S. Navy ship maintenance, repair and overhaul, its dock at the Yeongdo shipyard in Busan is booked through 2028. Its shipbuilding backlog rose to about 2.1026 trillion won as of the third quarter of last year, more than doubling from 915.1 billion won in 2021.

Daehan Shipbuilding has accelerated construction on the back of orders that have continued since the start of the year. In early January, it secured four Suezmax crude oil tankers from new customers, then added two more of the same type from a Europe-based shipping company. The company plans to boost revenue by increasing dock turnover.

K Shipbuilding’s shipyard utilization has also topped 110%, a sharp increase from 93.47% in 2024.

The expanding backlogs are translating into stronger earnings. HJ Heavy Industries posted operating profit of 67 billion won last year, up 824.8% from a year earlier, as shipbuilding revenue rose and its profit structure improved.

Daehan Shipbuilding has maintained operating margins in the 20% range for five straight quarters. On a consolidated basis, its 2025 revenue was 1.2281 trillion won and operating profit was 294.1 billion won, up 14.2% and 86.1%, respectively, from the previous year.

K Shipbuilding has not yet finalized last year’s results, but analysts point to improving prospects as rising orders lift utilization. Its cumulative operating profit through the third quarter of last year was 84.7 billion won, more than quadruple the 15.8 billion won a year earlier. Early this year, it also signed new shipbuilding contracts for four 50,000-ton petrochemical product carriers.

Market watchers say the gains at smaller shipbuilders reflect structural change rather than a brief upswing. They point to a shift away from low-priced volume orders toward selective contracting for higher value-added vessel types, improving both the size and quality of backlogs.

“Smaller shipbuilders used to mainly fill gaps left by large yards, but now they have moved into focusing on higher value-added vessel types,” an industry official said. “The biggest change is that profitability is improving even as dock utilization rises.”

* This article has been translated by AI.

Lee nakyeong nakk@ajunews.com