An employee rides past a container ship under construction at Hyundai Heavy Industries Co.’s shipyard in Ulsan, South Korea in this file photo. The world’s largest shipbuilder, led declines among shipyard stocks on concern of fewer orders for vessels this year after bulk rates fell the most since June 1989. Hyundai Heavy dropped 6.6 percent, the biggest decline in almost five months, to close at 382,500 won. Unit Hyundai Mipo Dockyard Co. declined 6.5 percent, the largest loss in two months, to 244,000 won. Bloomberg

HONG KONG—Hyundai Heavy Industries Co., the world’s largest shipbuilder, led declines among shipyard stocks on concern of fewer orders for vessels this year after bulk rates fell the most since June 1989.

Hyundai Heavy dropped 6.6 percent, the biggest decline in almost five months, to close at 382,500 won. Unit Hyundai Mipo Dockyard Co. declined 6.5 percent, the largest loss in two months, to 244,000 won.

Bulk rates plunged last week on concern economic slowdowns in China, the world’s biggest buyer of iron ore used to make steel, and the US may reduce trade demand for commodities and consumer goods. Demand from China, Asia’s second-largest economy, last year helped lift fees to a record, prompting vessel orders.

“Investors are worried that with rates falling so much last week, shipping lines may pull back from ordering more vessels from shipyards,” said Lee Jae Won, an analyst at Tong Yang Investment Bank in Seoul. “That would mean the momentum for new orders could come to an end this year.”

Lee has an “overweight” rating for South Korean shipyards.

The Baltic Dry Index, which measures shipping costs for commodities, fell 4.6 percent on January 11 to 7,949.

“The index is often used by investors to track rates for the shipping industry,” Lee said. “It seems investors have overreacted to the news.”

Strong demand from operators of vessels that carry iron ore, coal and consumer goods helped yards in South Korea to win record orders for a fifth straight year in 2007, stretching deliveries to as long as 2012.

Shipping lines including STX Pan Ocean Co. and Pacific Basin Shipping Ltd. spent a record $179.8 billion in new vessels in the first 11 months of last year, 40 percent more than $124.4-billion invested for all of 2006, according to London-based Clarkson Plc, the world’s biggest shipbroker.

Hyundai Heavy’s net income more than doubled to a record 434.7 billion won ($464 million) in the third quarter, with sales climbing 19 percent to 3.73 trillion won.

Samsung Heavy Industries Co., the world’s second-biggest shipbuilder, dropped 4.5 percent to 34,300 won. Daewoo Shipbuilding & Marine Engineering Co., the world’s No. 3, fell 3.7 percent to 40,800 won.

Chinese shipbuilders also declined. Yangzijiang Shipbuilding Holdings Ltd., the nation’s second-biggest nonstate-controlled shipbuilder, fell 8.8 percent to S$1.56 in Singapore. Guangzhou Shipyard International Co., China’s first publicly traded shipbuilder, dropped 2.3 percent to HK$38.20 in Hong Kong.

The drop in the bulk rates also pushed shipping line shares lower in Seoul. Hanjin Shipping Co., South Korea’s largest, fell 4.6 percent, the steepest decline in almost two months, to 35,200 won. STX Pan Ocean Co., the country’s biggest commodities carrier, dropped 3.5 percent to 2,620 won. (Bloomberg)

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