S. Korea's top shipbuilders expected to suffer earnings shock in Q2

South Korean shipbuilders are expected to report sluggish second-quarter earnings despite brisk orders due to a sharp rise in steel plates prices, analysts said.

Chung Dong-ik, an analyst at KB Securities Co., emphasized that a price hike in raw materials, including steel plates, will eat into shipbuilders' profits.

Steel plates take up about 20 percent of ship construction expenses.

POSCO raised the prices of steel plates for ships to 1.15 million won per ton, up nearly twice from a year ago.

The leading local shipbuilders, Korea Shipbuilding & Offshore Engineering Co. (KSOE), Daewoo Shipbuilding & Marine Engineering Co. (DSME), and Samsung Heavy Industries Co. exceeded expectations for new orders in the first half.

KSOE received orders worth $15.2 billion so far this year, surpassing its target order of $14.9 billion in the middle of this month.

Samsung Heavy Industries and DSME also achieved over 60 percent of their annual order target in the first half of 2021.