Yuanta Securities Korea said on the 15th that, contrary to concerns, China's sanctions on Hanwha Ocean are having a limited impact on the market for now, and if the shipbuilding and shipping dispute between the United States and China intensifies, there could actually be upside.
Earlier, China's Ministry of Commerce said the previous day it would, under the Anti-Foreign Sanctions Law, ban organizations and individuals in China from conducting activities such as transactions, cooperation, and more with five U.S. subsidiaries of Hanwha Ocean. Hanwha Ocean's share price plunged 5.7%, and shipbuilding stocks also closed lower.
Kim Yong-min, an analyst at Yuanta Securities Korea, said, "In a situation where companies expected to play a central role in expanding the U.S. shipbuilding industry are fundamentally blocked from having ties with China," and added, "Even considering energy import-export relations and recent trends, the impact of the sanctions is very limited."
He added, "Ships made in the United States originally have no reason to be entangled with China," noting, "U.S.-made vessels, which have no price competitiveness in the global shipbuilding market, are built from the outset targeting transport between U.S. ports, so the sanctions have virtually no impact."
Kim assessed that if the U.S.-China shipbuilding and shipping dispute intensifies, domestic shipbuilders would take on the role of agents for the United States and could benefit.
China currently holds 60% of the global shipbuilding market (bifurcated between Korea and China), and the reason the Office of the United States Trade Representative (USTR) can sanction China's shipbuilding industry through port-entry penalty surcharges is, paradoxically, this overwhelming market share. Conversely, the United States is not a major player in either the shipbuilding or shipping markets, so from China's perspective, the most visible target it can sanction on the surface is domestic shipbuilders.
Kim said, "Considering why domestic shipbuilding stocks drew particular attention in the U.S.-China maritime hegemony competition (the only counterweight to China), I judge that these sanctions are actually evidence that China is on edge."