Korea's Hanjin Heavy Industries and Construction has been hit hard by the cancellations by troubled French carrier CMA CGM, reports the Korea Times.
In a regulatory filing to the Korea Exchange, Hanjin said an "unnamed shipping group" scrapped part of it previous US$113 million order.
Shipbuilding sources told the newspaper that the line had cancelled a US$1.1 billion contract with Hanjin Heavy. "As far as I know, CMA CGM cancelled the contract with Hanjin," a high-ranking industry official who asked not to be identified, told the newspaper.
At least one South Korean shipbuilder is getting hit by the cancellation of orders by CMA CGM, and others are fending off cancellations.
In 2006, Hanjin signed a contract with CMA CGM for four 6,500-TEU ships at $100 million each for delivery in September 2009.
"Hanjin is facing other order cancellations from the French company due to the latter's unstable positions in terms of cash flow," said the official. "The French company will delay the delivery of the remaining orders from Hanjin. Situations are not favorable for the Korean shipyard."
CMA CGM ordered 40 ships of 369,500 TEU worth $5.1 billion at Asian shipyards, thus creating a $5.6 billion debt load. It has been trying to restructure that debt in negotiations with its creditor banks.
Industry officials say the world's big three shipyards, Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering and Samsung Heavy Industries, are expected to move away from possible order cancellations as the French company has ordered highly-profitable containerships with 10,000-TEU capacities.
"In 2009, bigger container liners, including CMA CGM, cancelled orders, mainly ships under 10,000 TEU. But the big three are still safe with their order books," another high-ranking industry official said in a Korea Times report.