Recently, South Korea’s Hanwha Ocean announced the signing of a construction contract with a shipowner from the African region for three Very Large Ammonia Carriers (VLAC), with a total contract value of 507.4 billion KRW (approximately USD 345 million, or RMB 2.337 billion), equivalent to a unit price of USD 114.9 million per vessel.
Hanwha Ocean did not disclose the shipowner’s information, but according to foreign media reports, the order comes from the British shipowner Zodiac Maritime. Each vessel has a cargo capacity of 88,000 cubic meters, and the contract also includes options for an additional two vessels of the same type. For reference, Clarksons data shows that the current newbuilding price for an 88,000–93,000 cbm VLAC is approximately USD 113 million, a 6% decrease compared to USD 120.5 million in the same period last year.
With this, the company has secured a total of 18 new vessel orders so far this year, valued at USD 3.2 billion (approximately RMB 21.96 billion), which is about 32.6% of the USD 9.83 billion in orders received last year.
Hanwha Ocean is one of the world’s leading builders in the VLAC sector. On March 9 this year, it successfully delivered the world’s largest 93,000 cbm VLAC, the first of its kind, to the Greek shipowner Naftomar Shipping and Trading, approximately four months ahead of the contract schedule. To reduce carbon emissions, Hanwha Ocean integrated numerous eco-friendly technologies into the design of this vessel type, including equipping it with an LPG dual-fuel propulsion system and adopting an ammonia fuel “Ready” design, allowing it to be converted into an ammonia-fueled vessel in the future based on the shipowner’s needs. Additionally, this vessel type is equipped with Hanwha Ocean’s independently developed Shaft Generator Motor (SGM) system and the intelligent ship solution HS4® (Hanwha Smart Ship Solution & Service, formerly Daewoo Shipbuilding DS4®), among others.
It is worth noting that to address the expanding demand for ammonia transportation and promote vessel upsizing, Hanwha Ocean, as the world’s first shipbuilder to secure an order for a 93,000 cbm VLAC, signed a Memorandum of Understanding (MOU) on eco-friendly technology cooperation with the Korean Register (KR) last June, and has subsequently officially initiated the joint development of a 150,000 cbm VLAC.
Previously, Hanwha Ocean obtained Approval in Principle (AIP) from Bureau Veritas (BV) in September 2022 and Lloyd’s Register (LR) in October 2022 for an 86,000 cbm VLAC, and has been continuously striving to develop zero-carbon shipbuilding technologies.
Industry insiders in South Korea state that since ammonia carriers are similar in construction technology to LPG carriers, which are a strength of Korean shipbuilders, and are high-value-added vessels comparable to LNG carriers, this vessel type is becoming a new strategic ship type for the Korean shipbuilding industry following LNG carriers.
Ammonia is an eco-friendly fuel that emits no carbon dioxide during combustion and is attracting attention as a representative fuel to lead the zero-carbon era. In particular, it can be converted into hydrogen through a simple process, making it the most economical means of hydrogen transport to date. Rystad Energy, a Norwegian consulting firm, estimates that by the mid-2030s, clean ammonia trade volume will reach 76 million tons, four times the trade volume in 2020; by 2050, annual ammonia exports will exceed 120 million tons. Most of this will come from Africa and North America. Based on this, international shipping companies are accelerating orders for VLACs, and it is expected that the total global order volume for VLACs could reach up to 200 vessels by 2035.
A South Korean industry insider stated that Hanwha Ocean is flexibly responding to market fluctuations based on a selective order-taking strategy centered on high-value-added and eco-friendly vessels, and this is translating into actual order results. The company’s strategy is to actively respond to the expanding demand for eco-friendly fuel-based vessels and continuously strengthen its order competitiveness.
South Korean industry analysis suggests that due to the impact of the US-Israel-Iran conflict, short-term uncertainties in the ammonia carrier market have increased. However, with increased exports from other regions such as the US, overall transport volume remains stable. Despite short-term fluctuations, the market is expected to maintain a positive development trend in the long term.
A South Korean industry insider commented: “While major ammonia importing countries are concentrated in Asia, the export share is shifting from the Middle East to regions like the US, and transport distances are increasing. Consequently, the demand for ammonia carriers is transitioning into a structure of sustained growth.”
As of now, Hanwha Ocean has secured 18 new vessel orders so far this year, comprising 4 large LNG carriers, 10 VLCCs, 3 VLACs, and 1 Wind Turbine Installation Vessel (WTIV).
