SEOUL, KOREA - Shipbuilding shares have fallen in droves on the news that the Panama Canal's expansion project may be delayed further. 

 

On January 10, the share of Hyundai Heavy Industries closed at 236,500 won, down 5.65 percent from the previous day's 22,000 won. The shares of Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering fell 5.68 percent and 3.01 percent, respectively, to 35,700 won and 35,400 won.

 

If the canal was not widened enough for over 10,000 twenty-foot equivalent unit (TEU) containerships to pass through the waterway, it would make little economic sense for shipowners to commission large container carriers.

 

The Financial Times reported on January 2 that the Panama Canal's expansion is in danger of being stranded due to construction delays and cost overruns. European building consortium GUPC issued an ultimatum saying it would suspend work on the project unless the Panamanian government ponied up an extra $1.6 billion to help cover extra cost.

 

GUPC had begun construction works in 2008 to widen the waterway three times the current size. Although the expansion is more than two-thirds complete, a funding dispute between the builders and the canal operators threatens to bring the construction to a halt surrounding who will foot the bill for cost overruns.