While watching Deepseek

While watching Deepseek
There is a concern that the competitiveness and prospects of the Korean shipbuilding industry may be overpackaged.

With the recent steep rise in shipbuilding stock prices, many see it as a leading stock that will lead 2025.  

Despite China's steep pursuit, the nation's shipbuilding industry has reached a phase of rising due to its limited supply capacity, overwhelming competitiveness in high value-added ships, and the Trump administration's check on China.

In terms of market share, China is already overwhelmingly ahead. However, China's quantitative growth is devalued because most of them build ships with low technology and low added value, such as bulk carriers, while Korea focuses on high-value-added gas ships.

As of 2024, China has won orders for 388 bulk carriers, accounting for 75% of the global market share, 16% in Japan, and 3% in the Philippines. China has 322 oil tankers, accounting for 74% and Korea's 17%, while Condayner has 259 oil tankers, accounting for 81% and Korea's 17%. As a result, China's share of general merchant ships, such as oil tankers and containers, as well as low-value-added bulk carriers, is promising.

Next, let's look at the gas line that shows that Korea has an overwhelming competitiveness. First, China secured 62 carriers of LPG, outpacing Korea's 59. Of course, it is true that Korea has a high share of the high value-added LNG market that demands the highest technology at 62%, compared to China's 38%.

Only a few years ago, however, a dry LNG carrier in China broke down in the middle of the sea, making it an international ridicule, and even LNG is gradually narrowing the gap. In the shipbuilding industry, reference and construction experience are important anyway, so it is difficult to guarantee Korea's absolute advantage even for LNG like other ship types.

Finally, I think it is a limited supply because Korean shipbuilders do not increase capa no matter how good the economy is, and in China, the expansion of existing shipbuilding books is steadily progressing along with the resumption of dormant facilities.  

In fact, this has already been well known since last year. Due to the two conflicting contents of the US check on China and China's fierce pursuit, the investment weight was taken relatively low with a slightly passive stance on shipbuilding investment, but the current situation is that the stock price has risen significantly and is feeling FOMO.

However, it seems that the current shipbuilding stock price does not properly reflect future risks unless Trump actively regulates China's merchant ships. A few years ago, interest battery stocks rallied with the US narrative that China regulates secondary batteries, eventually only increasing volatility.  

We look at this industry and that industry from a stock investor's point of view, but we are worried in many ways because of China. It seems important to find our competitiveness and areas where we can do well, rather than simply relying on external forces that the United States will keep China in check.